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REFINANCING; UTILIZING YOUR PROPERTY EQUITY

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A Message to You from Geoff Lee, President of GLM Mortgage Group

There is no question that recent real estate market trends have resulted in spiked property values over the last year. But what good is that equity if you have no access to it?! Might I suggest that you take advantage of these increased prices and tap into the equity that is available to you. Refinancing your mortgage to include a line of credit allows you to access the equity that is your right to use. Education costs for your kids, those much needed renovations, debt consolidation are just a few things that you can use your equity toward, not to mention possible investment opportunities. This ebooklet is here to educate you on your refinancing opportunity and see how you could utilize a Home Equity Line of Credit (HELOC). Give GLM Mortgage a call and let’s consider how the equity in your home can work for you.

Geoff Lee geoff@GLMmortgage.com 604-259-1203

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Table of Contents A Message to You From Geoff Lee ................................................................................................................................................................................................................................ 3

Table of Contents .................................................................................................................................................................................................................................................................. 4

7 THINGS TO KNOW ABOUT REFINANCING .......................................................................................................................................................................................................... 5

Case Study #1 ........................................................................................................................................................................................................................................................................ 7

Case Study #2 ................................................................................................................................................................................................................................. 8 Case Study #3 ................................................................................................................................................................................................................................ 9 Conclusion ............................................................................................................................................................................................................................................................................. 10

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7 THINGS TO KNOW ABOUT REFINANCING

1. BE AWARE OF THE PENALTY TO BREAK YOUR CURRENT MORTGAGE – Leaving a closed mortgage early

will likely result in some kind of penalty. Every lender is different in how they calculate penalties. But generally speaking…

a. Breaking a fixed rate mortgage – will result in you paying the interest associated determined by the current

interest rate for the remainder of your term. OR 3 months interest, whichever is greater. b. Breaking a variable rate mortgage – will result in you paying 3 months interest

2. REFINANCING OR SECURING A LINE OF CREDIT AGAINST YOUR PROPERTY a. REFINANCE – You can borrow up to 80% of the appraised value of your home, less the mortgage you have

associated with your home.

b. HOME EQUITY LINE OF CREDIT (HELOC) – You can take out a line of credit up to 65% of the value of your home, with the total of your HELOC and mortgage adding up to 80% of the appraised value of your home.

Beware of the costs associated with getting your HELOC. For instance, appraisal, legal costs, administrative costs are important to ask about.

3. DISCIPLINE, DISCIPLINE, DISCIPLINE – No matter how you look at it, borrowing money costs money. Debt is still debt. If you are using your money to do that much needed renovation or assist your family member in education, these may be viable and have a good return. If you are wanting to use your Line of Credit to go on that

all inclusive holiday for a week, you will certainly not see any return on your money.

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4. WHAT ARE YOUR INCOME QUALIFYING OBSTACLES? Every client is unique. And for some, qualifying for a mortgage is a little more difficult. When the lender sees a riskier file, such as STATED INCOME, they may add premiums. Be aware of the hidden costs of your mortgage.

5. USE A MORTGAGE BROKER TO SHOP AROUND – You don’t have to stay with your current lender to refinance

and you may just find a much better rate elsewhere. At GLM Mortgage Group we will make sure you know what

your options are.

6. TAKE ADVANTAGE OF LOWER INTEREST RATES – Historically, rates have declined. Pretty much every rate

that is out there is a good rate in light of where rates have come from.

7. ONLY CONSOLIDATE DEBT THAT HAS A HIGHER RATE – If you carry 0% interest on your car loan, it doesn’t

make sense to payout the loan with your HELOC.

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CASE #1 Refinancing for a better rate.

Take a look at the table below. By simple calculations, refinancing can save significantly in the amount of interest that you pay.

Summary of Findings

Payment End Balance Interest Principal Paid

Current Mortgage $ 1,487.06 $240,082.38 $ 43,616.49 $ 9,917.62 New Mortgage with new rate - new lower payment $ 1,201.56 $236,371.30 $ 29,627.56 $ 13,628.70 New Mortgage with previous rate - keeping original payment $ 1,487.06 $225,461.63 $ 28,995.74 $ 24,538.37

Interest Savings $14,620.75

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CASE #2 Refinancing for the purpose of consolidating debt

Refinancing isn’t just about getting a better interest rate. Many people refinance to consolidate their debt too. In this situation, you’re looking to roll high-interest-rate debt—such as credit card balances—into your mortgage to simplify your debt payments and lower your interest rate. By doing so, you could reduce your rate from 19%—the typical rate on a credit card—to 3%, and save thousands of dollars in interest payments.

That’s what Roxanne Saunders, 51, did this past August. At the time, she had $50,000 in high-interest rate debt on her HBC credit card. Hoping to retire in four years and clean up her finances, Saunders looked at the equity she had in her home—about $255,000 on a $430,000 condo—and renegotiated a $225,000 mortgage at a variable rate of 2.25%. She says it’s given her some much-needed breathing room in her monthly budget, paying $600 a month less in total debt payments than before she refinanced. “I think I’ve put the bank manager’s children through college with the money I’ve spent on interest payments over the years,” says Saunders. “B ut I plan to retire at 55, sell the condo and invest in a retirement property outside of the city. This plan works well for me.”

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CASE #3

Refinancing for investment purposes

You can put the equity in your home to work and finance the purchase of investments and/or do a debt swap to transfer non tax deductible debt to become tax deductible. If done properly you can not only benefit from the lower carrying costs,

but also make all (or a portion of your interest tax deductible). For high income earners this can cut the after tax cost of interest nearly in half! Make sure you have an experienced financial advisor to guide you along in this process.

or If you have home equity and are interested in further real estate investing, you could take equity out of your current

property by refinancing the mortgage and using the increase as the down payment for the purchase of an investment property. This may also allow for additional interest deductibility that could be missed by using current savings instead.

Once you have a HELOC in place you can use this opportunity to purchase a new home or investment property, as long as you can qualify based on your debt load and guaranteed income. Contact GLM Mortgage Group and we’ll walk you through the process of using your HELOC to finance your new property purchase.

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Conclusion Refinancing may be a good option for you. Refinancing allows you to take advantage of the equity you own to your benefit. Maybe you need the extra money to

Purchase another property Renovate your house Pay for your kids education Buy a new vehicle The list goes on and on.

Give us a call at 604-259-1203 and we will let you know what refinancing your home looks like. We get you the fastest yes at the sharpest rate…guaranteed!

Copyright © 2016 GLM Mortgage Group

All Rights Reserved.

No part of this special report may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems, without permission in writing from the author. The only exception is by a reviewer, who may quote short excerpts in a review.