Cheryl Knowlton: Hi, everybody. Cheryl Knowlton with Dynamite Productions coming at you with Clay Johnson, Castle & Cooke Mortgage, Episode Two of how exciting it is that interest rates are so low. We are at this amazing sweet spot.
Clay Johnson: Yes.
Cheryl Knowlton: Let’s talk about when is it advantageous for someone to refinance?
Clay Johnson: That becomes the biggest question people have. Does it make sense? Kind of the rule of thumb that we look at, a lot of times, is if you have closing costs because you can’t do a no-closing-cost loan. Here is the thing. If you can do a no-closing-cost loan, it always makes sense, and you’re saving money. That’s great because you’re not going further into debt to do it. It’s kind of funny because you hear on the radio, “Hey, we do no-closing-cost loans,” and then you’ll hear, “We have this crazy low rate.” Well, those two are never in the same ad.
Cheryl Knowlton: Never on the same ad.
Clay Johnson: Never on the same ad.
Cheryl Knowlton: It’s none of the other.
Clay Johnson: A no-closing-cost loan is a great safe bet if you can save some money. You don’t have additional closing costs. If you do have some closing costs, the thing we want to look at is how long do you plan to be in that home? If they think it’s going to be for a while, we want to make sure they’re going to be paying off all those closing costs at least in three years. That’s kind of our target point on that.
Cheryl Knowlton: If they can drop the rate, by how much does it make sense?
Clay Johnson: If they can drop the rate kind of depends on their situation. As a rule of thumb, we say 0.75 or 1%. However, values have been going up so much, Cheryl, sometimes we’ve been dropping a little less but getting rid of the mortgage insurance altogether.
Cheryl Knowlton: Which is a whole nother topic.
Clay Johnson: Yes. We can talk about that a little bit on the next one, but it’s great. The other thing that we’ve been doing a lot of is debt consolidation with some folks. They want to do that or, as we’ve talked about before, getting some cash out to start becoming an investor and start being an investor in real estate. Those are a couple of the other things that we’ve been doing.
Cheryl Knowlton: Very exciting.
Clay Johnson: Yeah.
Cheryl Knowlton: There is so much more equity in most of our homes than we’re accustomed to having, which is wonderful for those of us who have had our homes since before the Great Recession of 2008. I held onto mine knowing that the values were going, woo, topsy-turvy all over the place, but it’s a sweet payoff now.
Clay Johnson: It is. They’re actually at back… either at or above that level.
Cheryl Knowlton: Absolutely.
Clay Johnson: Yeah.
Cheryl Knowlton: Okay, so be back into Episode Three, and we’ll see you there.
Clay Johnson: Bye-bye.