Cheryl Knowlton: Hi everybody. Cheryl Knowlton with Dynamite Productions back for episode four with Clay Johnson, Castle and Cooke mortgage. Okay. Today we’re going to talk about when is a good time to refinance to actually pull some cash out. I remember back when I was in mortgage starting in 1999 people using their home as an ATM machine and it was sometimes it was great if people had the discipline to cut up the credit card or not run the home equity line back up again.
Clay Johnson: That’s exactly the secret. And so we’re seeing that again like we’ve talked about in this leading up to this week, values have been going back up. People have great equity in their homes.
Cheryl Knowlton: Yes they do.
Clay Johnson: If they can drop their rate, drop their mortgage insurance. Awesome. And then there are those times where they say, “Hey, we have this equity. Is there any way we can kind of like help a little bit?” Maybe there’s been a layoff in the home or something. They need to reduce their monthly outgo. So we’ll look at doing kind of debt consolidation, what you have to be really careful about.
I love it when it’s for building a real estate investment portfolio, but when it’s just paying off credit cards, unfortunately, I’ve been doing this 22 years and I’ve worked with a lot of the folks the same time doing the same thing over and over again.
Cheryl Knowlton: And that’s the definition of insanity, right? Doing the same thing over and over again and expecting different results.
Clay Johnson: So unfortunately with a lot of those clients, I built up a good enough relationship that I can say, “Hey, this time, let’s make sure we shred those credit cards.” Do you know? You keep the account balances open from a credit management perspective, possibly if you have the discipline, but based on our experience last time, it may not be the best idea. And so, and there are other cases where it can make a lot of sense for folks to do that. But in the past, we saw people doing it to invest in a lot of these real estate investment groups. It didn’t go so well.
Cheryl Knowlton: Did not.
Clay Johnson: We’re seeing some of that pop back up a little bit. It’s just making sure we’re doing that from a wise economic perspective and that we know we’re going to have the discipline to make this a long-term important, ineffective decision.
Cheryl Knowlton: Absolutely. So the biggest rule of thumb that I found personally and professionally and helping a lot of individuals navigate these decisions. If you come up against a real estate investment group or scheme, or some kind of thing that you think is such a great idea that you don’t want to share it with anybody, that’s a good time to talk to somebody. A really good solid mortgage professional who’s going to help you navigate those decisions.
Or even a financial planner or an accountant who’s going to help you figure out your tax bracket and make good decisions. If it’s really, really a good thing, don’t hide the idea that’s, yeah, that’s a recipe for disaster.
Clay Johnson: Yep. And when it starts in the lead-in is, “Hey, this is an exclusive opportunity.” You’ve got to be kind of careful there. We’ve just seen too much of that over the years.
Cheryl Knowlton: A kind of is code for really.
Clay Johnson: Yes. Really careful there. So just a couple of tips that we’ve seen, guys. There are those times if you have some questions, want to look at some scenarios, just let us know. We’d be happy to run it for you and give our opinion if we think it’s a great time or not. And we will be very upfront about that. I can think of two times last week where John and I just said, “You know what? Probably not the best thing right now based on your circumstances.”
We’re in this business, like I said, 22 years, the long haul. We want to do things that are right for people and we know that it’s going to come back around. So that’s one of my favorite things to do is say, “Not right now.”
Cheryl Knowlton: And that’s the best way to play a long game.
Clay Johnson: Yes. Yep. Absolutely. So if you any questions, let us know. Otherwise, it’s been super fun as always with Cheryl here and we’ll look forward to catching you guys next time.
Cheryl Knowlton: Thanks.
Clay Johnson: Bye bye.