Preparing for Rainy Days

Who could have imagined interest rate would hike so much so fast? A 30-Year Fixed Rate mortgage was at a low 3s% in January, but the national average rate is hovering around 5.5% recently. What’s more, interest rate hikes are not done yet. We expect more hikes are coming. Fed hinted that they might have to increase interest rates by 50 basis points at next couple meetings. It is safe to say that the cheap money and bullish economy are gone. It is a time for us to acclimate to the new economy. This new economy looks a bit more expensive and challenging to live so I would like to share a few ideas that can help arming yourself with a financial umbrella.

Refinance:

Unlike the Dow Jones Industrial Average’s performance, the real-estate market in Hawaii has shown active and solid demand so far. Perhaps, the demand will be stronger during the summer and beyond that will help retaining or increasing property values, which will make it easier for you to cash out some of the equity through a refinance. Interest rates are lower than non-secured loans. Also they are fixed so you pay a fixed monthly payment during a term of a loan.

HELOCs:

A HELOC can be a good option if you prefer to draw funds as needed rather than a lump sum payment. It comes with a variable rate (the rate can change from month to month) and variable minimum payments, so it is harder to budget monthly payments. It may take discipline and efforts to keep track of monthly payments, but it offers flexibility you can not get from Home Equity Loans. Just remember that an equity line of credit is revocable. A lender can revoke or adjust a credit line like a credit card so there is no guarantee that your credit line will stay the same in the future.

Reverse Mortgages:

Do inflation, soaring property taxes, and higher gas prices impact your cash flow? If you are living off a fixed income, I imagine these rising costs impact your cash flow. Fortunately, property values have increased substantially in the past couple years that makes it easier for you to refinance with a reverse mortgage. You may want to consider a reverse mortgage If you are having trouble with 1. making monthly mortgage payments, 2. paying for homeowner’s insurance and property taxes, 3. paying for healthcare costs or 4. saving rainy days funds for emergency.

For most of us, property values have increased substantially in the past couple years.

At the same time, we have experienced rising inflation, gas price, grocery cost, and credit cards’ interest rates. If they have impacted your cash flow and you need to offset your loss of buying power, then cashing out the home equity can be a more economical solution than using credit cards or personal loans. Lenders like to lend to people with good credit and history. So don’t wait too long if you feel you need to cash out equity. It’s always easier to borrow when you don’t need money. Prepare yourself for rainy days!

If you would like to know more, please call me at (808) 365-5900 or email me at Shinichi.Matsumoto@myccmortgage.com.

Shinichi Matsumoto
Loan Officer
NMLS1852845
M 808.365.5900
E Shinichi.Matsumoto@myccmortgage.com

CrossCountry Mortgage | 3555 Harding Avenue, #100 Honolulu, HI 96816 | NMLS3029 NMLS1379257 Equal Housing Opportunity. All loans are subject to underwriting approval. Certain restrictions apply. Call for details. CrossCountry Mortgage, LLC. NMLS3029 (www.nmlsconsumeraccess.org)