There is a once in a lifetime opportunity for home owners and buyers… finance a home for the cheapest interest rates in 75 years. You can’t go back in time and buy a home, but what does happens is you have to take the market interest rates of the time. This in the past has driven clients to do risky ARM loans, but now everyone can afford a low Fixed mortgage. Please read along at these success stories based on real clients that have closed in the last 60 days, and learn how they used these interest rates to better their financial future.
The Jumbo Term Reduction Refinance: Michael and Jami
The couple bought their home in beautiful Birmingham MI, 7 years ago for 1.650 million and renovated the home with cash to up to $200,000. Now in their 40’s with 3 children they decided to make an investment in their future by reducing the term on their current loan and called Hippo Financial. The mortgage they locked originally to purchase their home was a 30 year fixed at 6.75%. This was the going rate for excellent credit and a 20% down payment, at the time. We closed their new refinance of a 1 million dollar loan reducing their term to 15 years fixed @ 3.375%. This dropped their payment from 8918.22 to $7172.65, and it cut 8 (96 payment) years off their current loan. When you do the math you can easily see that they saved well over 2.2 million in future payments and are owning their home free and clear 8 years sooner.
The difference between a 15 year loan and a 30 year loan is the colossal amount of interest that is charged the borrower over the period of the loan. This interest offsets the risk to the bank because the term is so long, and the longer the term the more unlikely the borrower will repay. For this reason 15 year rates are much lower, sometimes by a point in rate compared to the 30 year. Those points add up over time. In this case saving 3.375% per year, they saved 50.625% interest over the next 15 years, for starter’s not including the years we took off the loan at an interest cost of 6.75% per year. Michael and Jami’s choice was easy when you look at the math, and because the payment went down in their situation it became a no brainer.
Eliminating your debt increases your Net Worth while preserving your long term capital for other more important needs like retirement, and college. We are very pleased to have played a significant role in changing Michael and Jami’s debt restructure this year, please browse below for other case studies that may mirror your current situation.
Conventional Term Reduction Refinance: Dan and Lara
Dan and Laura have been in there loan for 8 years. Like many borrowers today they have paid their bills on time since the got the mortgage but due to the high unemployment across this country and state of MI, they weren’t able to refinance and lower their rate because their home wasn’t worth what they owed after paying for 8 years. Both of them were really frustrated. They tried the first HARP plan and it didn’t close due to higher than 105% LTV. They called Hippo and we consulted them on the new HARP 2.0 plan.
Our approval at HF got them a no appraisal loan from FNMA. Since it was their second time trying this made a big difference in the initial cost of the loan. They were at a 30 year fixed at 6.50%. Their payment was $1,485.36 per month. We did a new 15 year fixed HARP 2.0 loan at 3.0% and a payment of $1,277.58 per month, saving them $208 per month. This is a huge savings when you consider that we saved them 7 years or 84 payments of $1,485 ($124,740) and reduced their payment $208 per month. The total savings for Dan and Laura is $174,620 over the life of the loan or $970.11 in interest per month! Amazing!
The FHA Purchase: Daniel
Daniel recently relocated to Garland TX after receiving a job promotion and wanted to buy a new home. Daniel still had his home in Chicago, IL and needed a loan that would allow for a lower down payment, and enough room to qualify with the second home. Our 30 YR Fixed FHA loan gave him an option to put as little as 2.25% down payment, while Hippo paid for 95% of all closing costs on the loan. This was critical as the move from Chicago wasn’t cheap, and buying this home isn’t either. The closing costs that are required when buying a home include Owners title, Survey, Appraisal, Lenders title, Attorney fee, Recording, EPA endorsements just to name a few and for a new homeowner looking to buy some furniture it can be draining financially. Daniel locked a 3.25% Fixed 30 YR, and probably will never have to change the loan in the future, while keeping his cash and saving $3785 in the process on the closing costs.