Speaker 1 00:00:08 What's up, everyone. Welcome to the finance for physicians podcast. I'm your host, Daniel Raimi. Join me as we dig into what it looks like for physicians to begin using their finances as a tool to live better lives. You can learn more about our
[email protected] let's. Jump into today's episode, what's up everyone. Hope you're having a great day today. We're going to be talking mortgage refinance. We covered this in an episode of view shows back called how to capitalize on record, low mortgage rates. And so that, that show we kind of got into the weeds a little bit on how to analyze whether or not to refinance and what that looks like. So if you, if you want to understand a little bit more of the mechanics, definitely check that out first. That'll be a kind of a good precursor to this conversation, but today I wanted to talk a little bit more about some of the changes that have happened recently that that really affect this.
Speaker 1 00:01:06 Also I keep seeing in our planning firm over and over again, I keep seeing people that need to refinance and weren't aware that it was beneficial. And so we're going to talk about why you might think about refinancing, even though you may not realize it's beneficial and what's changed. We'll talk about what's changed recently that affects all of this. And ultimately the goal here is to save you interest or save you money on your mortgage. That's, that's typically the goal of ultimately to pay the thing off, but I think we'll definitely accomplish that. Today's at minimum, give you an understanding so that you can capitalize and pay the least amount of interest possible on these debts before we get into that. Um, I just wanted to thank you guys for those of you that provided feedback on our show, uh, format. Um, I've heard from you guys, uh, you like kind of the variety of shows.
Speaker 1 00:01:59 So we'll keep doing that. I've also heard some suggestions, a couple of you guys mentioned possibly bringing on other physicians to talk. So we'll work on getting some of those set up and, uh, or, you know, if you yourself have an interesting story or something to share, um, that would be great. Please reach out. We'd love to chat with you and, and, uh, get that out there. So, uh, thanks again for those that, that provided feedback. Okay. Why would you want to refinance now or, well, before we get into that, let's talk about what has changed recently. So I'm sure all of you guys, or have heard or been aware that interest rates are very low mortgage rates have been historically low been, seems like that's been all over the news. And so there hasn't not much has changed there. The rates have kind of trickled down.
Speaker 1 00:02:54 They seem like they've continued to kind of go down a little bit, but in the past, like six months, they haven't changed like dramatically. They've kind of eased downward and Ben kind of up and down a little bit. So interest rates have continued to be extremely low. So they're still at like record low, uh, rates, uh, like they were, you know, six months ago. And so that's, that's not really changed. What has changed is home prices. So home prices have been like skyrocketing, especially lately. If anybody, if any of you guys are trying to buy a home, you know exactly what I'm talking about. And if you are curious about, uh, your area, you can check out your house on Zillow or something that sometimes is a good representation of values, but pretty much everywhere in the country home prices are just rocketing up. And so that's, uh, w so you might be wondering why does that have anything to do with refinance?
Speaker 1 00:03:50 Well, what's happening is as your home price goes up, you're, uh, building equity. So equity is the value of your home minus how much you owe on your home. So as the home price goes up, you're building equity. So this is extremely important because lenders typically will give you better deals or lower interest rates. The more equity you have up to a certain point, typically it's 20, 20% of the total value, 20% equity of the total value or 80% loan percentage of the total value. That's kind of the typically the best rate profile. And so, for example, like a physician, then I'm sure a lot of you guys have, uh, have physician lens, or maybe you looked at them. So a physician loan classic, a physician loan is like 0% down. You don't have to put anything down or maybe 5% down, low down payment and no PMI and easy to close and structured, you know, specialized product for physicians.
Speaker 1 00:04:53 Uh, the downside of them is, is that typically they have a higher interest rate than like the best alternative on the market. And so that's kind of a indirect penalty of, of having less equity. And if you compare it to alternatives, uh, even some physician loans themselves, do this, they'll say your rates 3.2, 5%. If you have 0% down, it's 3%. If you have 5% down, it's 2.7, 5%, if you have 10% down. So they, you know, that they've, maybe they tear the rate down incrementally as you have more equity, or if you don't have a physician loan, maybe you have PMI, PMI as insurance, they charge you as a result of not having enough equity. So that's a pure cost of, uh, having not enough equity. And so those kinds of things are essentially penalties for not having enough equity. So with this whole home price increase that we've seen recently, a lot of people are no longer in that situation.
Speaker 1 00:05:57 They now have plenty of equity to qualify for like the best deals out there, but it's not like the lenders going to come knock on your door and tell you that. So you have to be aware of it. You gotta be on, on your game and nobody's gonna, you're, you're gonna have to be the one to kind of bring this this up. So that's one big thing that's changed values have been going up and pretty fast. The other thing that it seems to have kind of shaken out recently a little bit is earlier on in the pandemic, jumbo rates were just kind of all over the place. And so it seems like at least, uh, recently that, uh, there's a little bit more competitive jumbo rate alternatives. Um, so jumbo rate is if you have a large loan balance above a certain threshold, I think it's around 550,000 or something like that, uh, except for us a few areas of the country.
Speaker 1 00:06:52 But if you have a really large balance, like say you have a million dollar loan, you're definitely in like jumbo territory, either a jumbo or a physician lens is kind of a way around that. But jumbo loan rates for awhile there during the pandemic for certain lenders, they just priced jumbo loans really high. And we covered that on an episode back with Richard Richie from SunTrust or truest, we covered, um, he talked a little bit about the jumbo rates and how they were wacky. And that was, uh, I believe that we recorded that in, um, maybe November of last year, but November of 2020. And so, uh, since then, though jumper rates seem to have gotten to a more stable position and they seem to be more competitive. At least the ones we've seen in it definitely depends lender by lender, but why is that important?
Speaker 1 00:07:41 So if you have a large loan balance and in the past it's been, you know, maybe you looked at refinancing earlier on in the pandemic and it was like, you know, the rate was going to be higher or something, or it wasn't competitive, uh, that could have totally changed. Um, so it would probably good be good to revisit that in that situation. And then on top of that, everybody, it seems like, uh, the past year or two, uh, ha people have seen a lot of life changes, not everybody, but a lot of people have seen some sometimes substantial life changes. So that's always a factor that can come into play, uh, that will affect this, this type of deal. So, uh, what I thought would be, uh, kind of a fun exercise today is I was going to talk about three different examples. Uh, and these are real people we have worked with, um, I'll change the facts and, and of course not going to share a personal information, but three kind of examples we have seen in our planning practice.
Speaker 1 00:08:43 And I'm going to talk through each of those. And, and I think they'll hit on some of each of these different scenarios to try to help you kind of understand a little bit more about what this looks like in where these situations pop up. So in order to kind of give you a good, uh, tool to measure this, I thought it would be good to use. Um, better mortgage, better mortgage is a lender, kind of a, I guess, virtual lender or an online lender. Their big claim to fame is that they don't charge a lender costs or origination cost or whatever. They're like a no commission lender I think, is what they call themselves. And when we've seen their proposals, they've been very competitive. I guess the downside of them is you don't have like a local representative. And so it's kind of like a, anything online.
Speaker 1 00:09:32 There can be downsides, but, um, but I think when you're refinancing, so today we're kind of talking about refinancing mortgages. I think that's a little different than purchasing a home with, with a new home purchase. There's all these like intense deadlines and you really want to get the loan deal in order and by a certain Pacific time. So I personally would be a little hesitant to go with an online lender when I'm purchasing a home, just because I would want to go knock on their door. I needed to, to get the deal done now refinancing. I'm like, well, I mean, I want to get it done, but it's not like I have to get it done by the 17th of the month. So there's a little bit less pressure to close. So either way though, or mortgage is a, uh, very competitive online lender. And the reason I'm using them is they have very transparent, um, easy to use rate example tools on their website.
Speaker 1 00:10:29 So you can go to their website and just view rates and your zip code and credit score, or home value, mortgage balance, and all that stuff. And you don't have to put in your personal information and they'll spit out examples of, of rate and cost breakdowns. Um, so anyway, how many use better mortgage for rate examples and cost examples, and then they also have a refinance tool. That's pretty good. Uh, so I'll use that as well as I talk through these examples. So you can get onto better mortgage and do the same for your numbers, plug them in and, you know, it takes like two seconds. Okay. So first example, we're going to talk about, okay, so this family, um, bought a home, I guess it was about a year ago and they were starting in practice moving to a new area and I'm just finishing a fellowship and yeah, as do many people in that situation, they, they didn't have much of a down payment or any.
Speaker 1 00:11:31 And so they chose a physician loan. Uh, it was 100% financed. They had fortunately, um, gotten the deal kind of arranged, uh, prior to the pandemic. So it was not for a while there, it was difficult to get a hundred percent financing loans, but, uh, they had gotten it done before that all kinda came, came out. And so they, uh, bought a home for three 75, or I'm sorry, it was a $300,000 purchase price. And so they finance about 300,000 on the loan. And so a hundred percent dancing, physician loan, 3.5% was the interest rate. Okay. So most of the time, so imagine if maybe you're in this situation, you have a physician loan, you just got it a year ago, two years ago, maybe you hadn't paid your loan balance has barely gone. Like, you know, in, in short of a time period with a 30 year mortgage it's they had a 30 year mortgage, um, th basically minimal, uh, principle payments, the loan balance just doesn't yeah.
Speaker 1 00:12:32 Change much. And so, um, and then you're, you know, thinking to yourself, well, how in the world 3.5% is, seems relatively competitive. So, you know, what, why would it make sense to refund it? So we'll look at the numbers, this situation, what ha what is the most impactful for this situation is home prices. So their situation didn't change much. They don't have like lots of money to put down. Uh, yet they, um, their life situation really hadn't changed. Their credit is still great. Um, but you know, their financial profile is the same. What has ha has changed is the home prices have gone up dramatically. So their home pro or their current value of their home is now at about three 75. They didn't realize that exactly. Or that it, it, they didn't realize it had gone up that much. That was a big surprise, but it has.
Speaker 1 00:13:24 And so what has happened is originally when they got the loan, they were in the physician loan profile, which is like I was saying before, that tends to be higher interest rates and a net cost is higher. And just as a result of having less equity, now, there all of a sudden in this position, just in little over a year's time where they have plenty of that equity and are, um, able to get like the best deals out there. So if you plug, so let's just use round numbers, I think it's easier just to use round numbers. So if I go to better and I'm looking at a, I'm plugging my zip code, and I'm looking at three 75 for the home value mortgage balance, let's just say the mortgage balance is 300,000 today, and it's going to spit out some rates. So a little more about that this family's situation.
Speaker 1 00:14:16 They like the idea of paying off their mortgage before 30 years. So it would be ideal if they could lessen that term, but they don't have, have like tons and tons of extra cashflow. They could definitely afford, you know, a few hundred dollars a month. No problem. And so what we, uh, so when we plug in the rates, okay, you plug it into better. They start out with a featured rates. I like to go to this 30 year or the 20 year or the 15 year, whichever one you're looking at, I would click one of those. So let's start with a 30 year for their situation. Well, first of all, like I was just saying they would rather pay it off sooner. So when I shared the 20 year rates, they were like, Oh, that's not a problem. So basically we're looking at 20 year term in this situation.
Speaker 1 00:15:05 And so their payment, uh, was so in the 20 year fixed scenario with the $300, $300,000 balance, the payment they're looking at is in the 1,650 a month, 61,650 a month range. And, uh, that's completely reasonable for them. It's like, uh, you know, two or $300 more than what they're paying now. So that's what we're looking at. So when you click that 20 year tab within better mortgage, it spits out a bunch of different examples. So I'm going to explain, try to explain kind of what you're looking at here. So basically, um, as I just plugged this in now the top example for my, uh, output today, and these numbers change all the time. So it's not, you know, you might look at it a few days later and it's going to be completely different numbers. But as of today, we're recording this on May 17th in 2021.
Speaker 1 00:15:55 So as of today, uh, the 20 year fixed, the top example is 2.5% interest rate, 15, 19 per month, monthly cost. And the points is a 3003 69. That's the top example. And then there's 3.2 0.625% example, 2.7, 5%. And it goes in 0.1, two, five increments up on the rate all the way up to 3.2, 5% is the highest rate example they're spitting out. And in that example, the monthly cost is 1702 a month. And the credits, and it doesn't say points anymore. It says credit. So the credits are 4,848. Okay. So I think the interest rate part makes sense. The monthly costs. I'll explain that in a second, but what's changing on these really is basically your they're playing with the, uh, interest rate. Um, you can essentially tell the lender what interest rate you want, and it's just gonna affect whether you pay them money or they pay you money.
Speaker 1 00:16:57 You can get a credit back. If you take a higher interest rate, versus if you take a lower interest rate, you have to pay them for it. And so that's the credit point set up going on? There is like essentially each, um, 0.1, two, 5% rate change they're making is either generating a credit or adding costs to the loan, which in turn is changing your monthly costs because the interest rate is, is different as well. In, in their example, we were looking at a 3% interest rate. So there are 3.5% now, and their example, we're looking at a 3% interest rate and that would generate a 3,300 3,300 a month, uh, or I'm sorry, $3,300 credit. And the monthly cost would be 1664 a month. So I'm going to jump over to their refinance calculator. We'll link to both of these in the show notes, the rate tool and the refinance calculator.
Speaker 1 00:17:58 So I'm going to jump over to their refinance calculator and enter in their balances into here and enter in the exact rate quote. I just got so $300,000 balance. They're at 3.5%. They started the mortgage in about 20. I think it was 2019, actually 2019 new interest rate. 3%. The cost of the refinance is actually negative 3,300 because they're giving you a credit 20 year fixed on the second one versus 30 year on the first one. Okay. So I plugged it all in and this situation, what, what it's going to show you is how to compare the two loans, the current loan versus the refinance line. I like to play with the advanced settings. If you click show advanced settings right below the things that I just entered, I would just put zero for all of them, because most of you are probably not able to deduct your interest on the mortgage.
Speaker 1 00:18:54 If you are, you can include that, uh, tax percentage there. But I just like to put zero for all those, just to simplify this a little bit. So this is assuming all those other settings are 0% for all three of them. So this is just a pure cost example, no, uh, other variables. So after five years, this new loan saves them a little over $12,000. After one year, this, the new loan saves them about 4,800, a little over $4,800. Okay. So they were shocked about those numbers because they're like thinking, ah, we don't have 3.5% sounds competitive. We, our house price hadn't changed that much. We looked at physician loans and they're still around that rate. But what has happened is now they're now in a completely different profile. They can qualify for a really any loan because they have plenty of equity. Um, better mortgage happens to be an ultra competitive lender, and they're giving them a credit to refinance at 3%.
Speaker 1 00:19:58 And, uh, so they instantly break even they're ahead by 3,300 right away. And then they start saving on the interest. And after five years, it's, you know, added up to $12,000. So they didn't think refinance made sense. Ultimately, they, it was a no brainer and it was a, you know, very, very substantial savings just to go to a 3% rate. So I think what's important here. One of the things I wanted to point out is about, um, the points and the closing costs. When you look at better their featured rates. So going back to that rate tool, they typically feature, uh, the low rate examples. I think that's just cause they want to draw people in for, they want to show that rate. Cause it seems like most people that go to better one, a low rate, but it's not all about the rate. The points are important as well.
Speaker 1 00:20:48 And so I tend to, when in doubt, lean towards zero closing costs and preferably even a little credit, the reason is because when there's no. So when, when we look at loan, when I say loan costs, I mean like literal, you have to write a check to close the deal that you would have otherwise not had to pay. And so ideally your closing costs are zero to refinance because as long so in that situation, it's, first of all, we're very simple to compare. It's like, okay, if I, if my rate is any amount less than what it was before, and my closing costs are zero, I'm going to start saving interest from day one. And these better examples we just looked at, not only is it zero closing costs, it actually is paying you a credit. So you're getting a little bump to kind of offset, uh, other costs.
Speaker 1 00:21:40 And so that's, you know, even better you're, you're breaking even, even instantly as well. And you're actually ahead of the game instantly. And then you're automatically still saving interests. Technically if you run the numbers, this works well, particularly for shorter time horizons, you know, five years or less, it's going to be typically best to not pay closing costs. For those of you that like to really get into the weeds, uh, you can run the numbers on all this stuff. What I would say I would lean towards, well, first of all, people tend to overestimate the law. The, the time that they're going to stay in a house, they also tend to not think about the possibility of refinancing again. And I've seen so many people refinance or move much faster than they originally planned to do. So I've kind of my philosophy around this has evolved over time to where I that's part of the reason I'd lean towards going with a low closing cost and preferably even a credit on a refinance because it makes sense.
Speaker 1 00:22:43 Even if you move in, like, you know, if you're getting a credit, it makes sense. Even if you move in like two months or refinance again in two months. And so that's been an appealing, uh, strategy with the people we've worked with in the past. So that's what we're looking at in this scenario, they're going from a 3% or three and a half percent interest rate to a 3% rate they're instantly saving because they're getting a credit on the refinance. And then over time they're saving pretty substantially to the tune of, you know, it's over $10,000 after five years. And, uh, it's all because it's mainly because the value of their home has gone up and they're using a competitive lender, uh, which is better in this example. And, um, and this, this type of setup has, is happening all over the place. Second example I was going to share.
Speaker 1 00:23:32 This is kind of more of a life. Life has changed scenario. This, this family, um, bought a house. Uh, it was about two, two or so maybe three years ago. And since then they have, uh, their, their business they've I guess they were originally working for a hospital and they have since then started a practice and have been running a practice. So what happened was, so they had a 4% interest rate, which we kind of knew was pretty high. Their balance around the balance today is around 400004% interest rate. We knew it was pretty high. What happened is interest rates dropped in during the pandemic and we're like, you need to refinance, but the business. So they had started the business. The business was too new and no lender was interested in giving them a offer because they didn't have a history. And so since then, their business has done very well and they've had a track record and fast forward to today, they've gotten a few tax returns under their belt.
Speaker 1 00:24:30 And, um, on top of that, their house has gone up substantially in value so that this whole market home price increase is also helping them. So they have not only has their business done well to where they can qualify for, you know, any sort of mortgage their house has also gone up substantially. So they have plenty of equity to qualify for any sort of mortgage. So they were at 4% now, basically they can get anything out there. Uh, what we were looking at was a 15 year. So if you run the numbers on better than their house, about worth about six 50 and the mortgage balance is about four 50. So they, as well as the per the people I was just talking about, they also liked the idea of paying the loan off faster. If it's not a budget Buster. And so 15 year mortgage, they, that was no problem.
Speaker 1 00:25:18 They were going to be fine with that, that, uh, example. So we're comparing their current 4% 30 year with about 27 years left, I guess, to the, uh, 15 year. So the rates on better are substantially lower. Um, so if you look at the 15 year, 2.2, 5% results in a $4,400, $4,441 credit, okay. So when it says, when there's a credit, you're basically breaking even instantly because you're not having to write checks. Now I've talked about that in the last example, as well, side note on that you have to get the loan estimate from the lender to really verify all this. So a loan estimate is the formal breakdown of all these costs. I'm just looking at a website quote engine. So if you're going to really move to the next step with this, you have to get the loan estimate. That's where it breaks down all the costs.
Speaker 1 00:26:16 And you have to verify these numbers are correct because sometimes the lenders will talk about points, but they won't talk about origination fees and hidden fees and all that stuff. Um, I think better, better about this better is better, better, has a better reputation for, uh, and that's what they, that's their claim. Um, their kind of a differentiator is that they, uh, don't have those, uh, commissions and origination fees, but, um, it's always best to get the loan estimate to verify all this stuff. So we're going to go with what they're quoting on the website, but just a side note on that you got to get the loan estimate, which spells out all these numbers, because there, especially when you're talking with like local lenders or just kind of, um, you know, average run of the mill lenders, because most of the time they have hidden costs or not hidden, but like there other costs besides just this points, credits thing I'm talking about here.
Speaker 1 00:27:10 So you have to add that into the mix. Um, but like I said, we're going to assume, uh, for better that these are all the costs or the credits. So this example they're going to, they can get the rate down to 2.2, 5% for a 15 year and get a $4,400 credit. So if we go over to the refinance calculator, I mean, this one's going to be just a home run. No-brainer $450,000 balance. 4% interest rate 2017 is when they started it. It was a 30 year mortgage. Now they're looking at 2.2, 5%, uh, interest rate with a negative 44 41, negative four to four 41 cost of refinance for a 15 year. So if you look at the numbers that spit out five years savings on the new loan, $48,000 one year savings are 12,000. So this is absolute no-brainer, you know, obviously the rates are a lot lower than the original loan and they're getting your credit.
Speaker 1 00:28:10 But what, what was important about this situation is just, they, they recently just filed a tax return for the business. And so they now have, so just two months ago, they were going to have a hard time qualifying for any refunds. But now that they have formally filed this tax return, the lenders now see one more year of records for the business, and it's a good year and the right trajectory and all the options open up. Plus like I said, they have now considerably more equity. Uh they're well, over 20%. And so as a result, they can, they're going to realize big savings by refinancing last example, I was going to share, this is a jumbo loan sort of example. This family got a loan. Uh, several years ago. It was, um, on a 1.7, $5 million house. They, the loan was 1.2, 5 million, and it was a 30 year jumbo loan, not a physician loan.
Speaker 1 00:29:04 It was a jumbo loan. They put quite a bit down 3.7, 5% was the interest rate. And so 3.7, 5% for a while for the past year or so earlier on in the pandemic for jumbos was, it was difficult to get. Even the rates were like a lot lower than that. Jumbo loans were tricky to get, and it's still for some lenders might be a tricky to get competitive rates for jumbo loans, but, uh, let's check out what better says so better mortgage. If we plug in a 1.2, $5 million mortgage, and for them, we're just going to look at 30 year. That's what they ended up doing. It fits in their budget. They don't want to, uh, they're kind of a little bit tight on cashflow, but with a 30 year we're looking at like a 3.2, 5% interest rate on a new 1.1 0.2, $5 million 30 year and a $7,462 credit.
Speaker 1 00:30:03 So, or you could go 2.99 with a $2,500 credit. I kind of lean towards the 3.25 just because I've seen so many people refinance a lot and move a lot. And, and that's just makes it better shorter term. Um, so if we use the 3.25 example, and we compare it, so back to the loan calculator, 1.2, 5000003.7, 5%, they got this unlike 2019, I think one, 3.2, 5% with a credit of 74 62. So what happened? So when you're, um, dealing with that, the larger, the balance, the more small interest rate changes affect things. So even just like a 0.2, 5% savings can be like big time interest savings on, on a million plus loan. So don't pay attention to the rules of thumb of like only refinance when you can save 1%, it's all about your situation. It's all about interest rate plus closing costs.
Speaker 1 00:31:05 And it's all about over time and how that is, uh, reflective of your situation. So this, this situation comparing the two loans, interest rates savings is about a half a percent. Doesn't sound huge, but they're getting a credit on it for 7,000 using betters numbers. So after a year, this, uh, if we compare the two after a year, they're about $13,000 better off. And after five years, we're looking at like 37,000. So pretty substantial savings, well worth the effort and not, it doesn't seem like a huge interest rate savings, but, you know, on that size balance pretty substantial when you had all, all of it up together. So these are just, um, meant to be like, you know, general examples, always look at your situation, talk to your advisor and get a personalized info for your situation. It's going to vary considerably depending on what you have going on, but in general market prices, as I said at the beginning, market prices have gone up substantially for houses, which is translated to more equity for people which, which allows for much more competitive mortgage options.
Speaker 1 00:32:19 Plus rates have continued to stay extremely low. And on top of that, jumbo seems to have gotten a little more competitive. And when you start to incorporate what you have going on your life changes a lot of times there's, there's home run opportunities like this, and you don't even realize it's it's, it's lurking there. So if you're, I think a good kind of, you know, general takeaway, if you have a mortgage and it's in the threes, you probably at least ought to be thinking about this, especially if it's on the high end of the threes, it should definitely be something you're paying attention to. And you have at minimum run these numbers. So anybody that has mortgage in the threes and particularly, you know, above 3.2, 5%, um, definitely above 3.5%, you ought to be running these numbers. I think that's a good kind of a measuring stick at this point in the game.
Speaker 1 00:33:12 But like I said, all this changes your situation is, is also a big part of it. So you want to start with like a better mortgage to kind of get a rough idea. And if you see, if you look at these type numbers on a better mortgage and you're feeling like it might make sense, then you want to get a loan estimate. That's like a more formal breakdown, and you got to understand those cost differences. You're going to basically, you're comparing your current loan to the new loan costs. Like I said, I go into more depth on that, on the how to capitalize on regular mortgage rates. I'll link to that episode in the show notes, but basically you got to understand the cost of one versus the other, and be cautious about like, assuming you're going to be in the house for a really long time, or that you're not going to refinance for a really long time, because that just has happened.
Speaker 1 00:34:01 I mean, first of all, people move faster than they realize. You know, that's kind of the general rule, um, that, that we've seen is people tend to overestimate how long they're going to stay in house. Also interest rates. Everybody seems, seems to always say, interest rates are going to go up yet for the past 10 years, they have just been continually trending downward. So, you know, you never know what interest rates will do. So there's a decent chance you might refinance again. So be cautious with assuming those things and potentially lean towards a faster break even, and not paying points or closing costs. Ideally, ideally they pay you a credit so that you're instantly ahead of the game. If they pay you money to, to close a loan, you're going to be, and your interest rate is lower. You're going to be ahead from day one and saving on a monthly basis.
Speaker 1 00:34:50 So you want to definitely understand that and, and kind of lean towards a faster break even if possible. And then another big thing with refinancing is be cautious about, um, um, refinancing to the same mortgage you had before. Like if you have a 30 year, um, ideally you make progress when you refinance to like, you know, maybe a 20 year, so that you're ratcheting that term down over time. And also another kind of, of course, I'm a financial planner. I'm going to say this don't ever cash out. Don't take a cash out to go buy a boat or whatever. That's probably not a good idea to take a cash out, even though a lot of people are doing it, um, may not be the best idea. And last thing I'll mention is it's definitely a good idea to shop, uh, lenders, especially when you're talking about like local lenders or just like run of the mill lenders, places like better, I think a little, uh, more transparent or competitive, um, in terms of their pricing.
Speaker 1 00:35:52 And so you're probably not going to find somebody that's lower. It's going to be difficult to find somebody that's lower than like a better, or like a low-cost lender like this. But if you're talking to like a, say fifth, third, or a truest, or one of the big lenders or a local lender, it's definitely, it's, it's, it's, it's going to be in your best interest to, uh, shop those and, and, and tell the lenders you're shopping too, so that they, a lot of times they'll give you a rate discount when they know you're shopping. Um, but when you shop ask for the loan estimate, the loan estimate is the formal breakdown of costs. And you can compare those between lenders and, uh, you get a better idea. If you want to understand more about how all those work or how the details of that work definitely reference our, uh, episode on capitalizing on the rates. Also, if you have specific questions or want to understand more about this, feel free to reach out. I'm happy to kind of point you in the right direction. And is there any questions you have? I right guys, I hope that's been helpful and, uh, we'll look forward to catching up next time
Speaker 2 00:36:56 As always, thank you so much for joining us today. If you found this valuable, please give us a review on iTunes and share with a friend. Also check out our
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