Mortgage Refinancing
If you’ve built up equity in your home or utilized an interest only or adjustable rate loan to purchase your home, you may want to use an EARN Equity Note to pay down your mortgage and refinance with a lower loan value. In this way you can reduce or eliminate your monthly payments, and be able to save more for retirement.
Many homeowners used interest only or adjustable interest rate loans that can become quite painful with increasing interest rates. Now you can use an EARN Equity Note to get rid of those pesky interest only and adjustable mortgages by refinancing and using an EARN Equity Note to reduce your exposure to rising interest rates.
How Does It Work?
With the rapid rise of home prices, your home is probably worth quite a bit more than when you bought it. The difference between what your home is worth and what you owe is your equity. Using an EARN, you can convert up to 50% of your equity into cash, which can be used to pay some or all of your mortgage balance. That allows you to refinance the remaining balance, resulting in a lower payment, or no payment at all. This is especially attractive to homeowners approaching retirement who are looking to reduce their monthly expenses or those with interest only or adjustable rate mortgages.
Can I Get Cash Out?
While you can extract equity using the EARN, you should be very cautious when doing so. Equity extraction for specific financial goals is a very good use for the EARN product. As an example, you can reduce your reliance on having to use your home equity for retirement by taking a portion of that equity now, and diversifying your wealth by investing in other assets such as stocks and bonds or mutual funds. Alternatively you can choose to fund college education for your children by using the proceeds to fund a 529 plan. All of this can be done without increasing your monthly payments. But...it would be a huge mistake for you to take your hard earned home equity and spend it frivolously. Personal financial awareness is a core mission for The EARN Group.
Example of Mortgage Refinancing
Before Refinance EARN
Home Appraisal |
Outstanding Mortgage Balance |
Monthly Mortgage @6% |
|---|---|---|
$800,000 |
$300,000 |
$1,799 |
After Refinance EARN
Home Appraisal |
Refinance EARN (37.5% of Home Value) |
Outstanding Mortgage Balance |
Monthly Mortgage @6% |
|---|---|---|---|
$800,000 |
$300,000 |
$0 |
$0 |
Next: Retirement Income