With today’s housing market demonstrating an extraordinary increase in home values, it could be your opportunity to refinance. As a reserve or Guard member, securing your finances with your own equity to consolidate your debt might be something to consider.
Navy Reserve Lt. Commander Bryan Bergjans knows all about refinancing. Though he has spent more than 20 years as a sailor between his reserves and active time, his day job as Caliber Home Loans’ senior vice president of military lending has taught him a thing or two.
“With inflation and gas prices increasing, many military families may be using their credit cards more than they care to. But this sellers’ market has created a unique opportunity for debt consolidation by utilizing your own home’s equity,” Bergjans said. “The Federal Reserve indicates credit card interest rates typically hover between 16-30% depending on your credit, so refinancing your home even with today’s slowly rising mortgage rates can be a game-changer.”
A home mortgage refinance, or “refi” for short, can be utilized for a number of purposes, one being to revise the terms of an existing credit agreement but consolidating multiple debts into one with a lower interest rate. Even if it drops your existing interest rate by 1%, refinancing is worth it over the long-term for savings. Depending on when you purchased your home, you may also be able to save by using another form of refinance – a cash-out refinance – to withdraw some of your home’s equity to pay down your other debts.
But what if the interest rate now is higher than when you obtained your original mortgage?
The first step in determining whether a refi is right for you is to examine your household budget, Bergjans said.
“Figure out what you are spending on your existing debt – like car loans, personal loans and credit cards,” he said. “Once you’ve determined that number, it’s easy to hop on Google to utilize free calculators to figure out what a mortgage would look like with consolidated debt. From there, you’ll be able to calculate the savings for you and your family.”
Though the Federal Reserve has indicated America will likely see rising interest rates to combat inflation, a refinance may still be the best choice. Starting with a good budget and walking through all the options will give you peace of mind for your financial future. According Bergjans, the key to a successful cash-out refinance is to not run the debt back up and negate all the hard work you just accomplished.
“The uncertainty of the market is absolutely enough to make anyone nervous, I completely understand. When you add in worry about finances and your responsibilities to serve while managing a civilian career it can be overwhelming,” Bergjans said. “My goal as a lender at Caliber isn’t to simply sell mortgage products but ensure that our customers know they are family, whether they ultimately choose us or not.
“We’re all in this together and if there’s a way that we can work with you to relieve your stress over your current budget by refinancing and consolidating all your debt into one payment, then that’s what we’ll do.”