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New Year, New Mortgage

Mar 04, 2020 - Posted by: Rocky Mountain Credit Union

There are all sorts of ways to start in on your 2020 financial goals. This is the ideal time to look things over and see where you could be doing better financially. Once you've stopped buying expensive lattes and you're regularly brown-bagging it at lunch, you can still find more wiggle room for savings when you reassess your mortgage. A few simple options can get you set to meet your New Year goals. Here's your starting place to get all the info on a new mortgage for the new year.



A Home Equity Line of Credit, or HELOC, can help make your real estate – typically an illiquid investment – a whole lot more accessible cash-wise. This is a type of loan where you open a line of credit based on your home's worth. The difference between what you still owe and the value of your home – the equity – acts as collateral. It most commonly structured as a line of credit, where you can take out up to a set amount during a specified time. If you don't want to manage interest-only payments over the use of the HELOC, it can be structured as a one-time loan. How you spend it, though, is up to you!





Accessory Dwelling Units, or ADUs, can be another way to get more out of your mortgage. With an ADU on your property, you can turn wasted space into valuable income you can put toward your mortgage if you rent it out. An ADU also drives up home value, especially in locations where there are no similar properties. Let's say you're outside city limits, but inside the boundaries, houses with an ADU are priced higher. Some of that value transfers to you through the local comparables when you get an appraisal.

This can also be an effective option for adult children with aging parents or parents who have children who are just getting their feet under them. Multi-generation living can help save everyone money and keep family close while increasing your property value. Think of it this way; they get to have their own space at a manageable price, but you all can still have dinner together.


Refinancing Your Home

Refinancing doesn't have to sound intimidating. Several different options can help your financial situation now and in the years to come. Maybe the FED drops the rates, and you can capitalize on the savings in your payments, or perhaps you need a shorter or longer-term to pay off the loan. Whether you might need to cash out some of your equity for a purchase or a renovation or you want to change the rate type from an adjustable-rate to a fixed rate, there are many reasons to refinance your home.





A cash-out refinance means the exact way it sounds. You exchange your mortgage for a new loan. That new loan will be for an amount more than what you currently owe, and you get the difference paid out to you in cash. This works exceptionally well for those times when you're contemplating a remodel or another home improvement that will increase the value of your home, but you just don't have the cash on hand.

Another pro for this option is that you are usually looking at lower interest rates in a refinance than with other similar options, like a HELOC. But those rates are still determined the same way, so you'll need 80% of the value available to actuate the loan.


Rate-and-term Refinance

Again, a rate-and-term refinance has its definition conveniently located in the name. This is more the traditional mortgage refinance you're probably thinking of, where you trade in one mortgage for another. You're getting new terms – for instance, another 30 years to pay it off – and preferably lower interest rates. It's a great way to save yourself money in the long run, especially if it's better for you financially to have a mortgage for the foreseeable future rather than pay it off faster.




We Can Help

No matter which option is right for you, taking a second look at your mortgage can be a valuable tool as you head into the new year. For additional help and advice on how to get more from your home, contact one of RMCU's mortgage specialists.  Get to know your local branch's representative. They make local decisions, onsite when it comes to your loan and how it's underwritten — an advantage you won't find at your average bank. But that's why you're with a credit union. Rocky Mountain Credit Union: membership has its benefits. Let us know how we can serve you in your mortgage needs.


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