Should I Refinance My Home NOW? (+ How to Pay 0% Interest on a HELOC)

Episode #1,034

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“Should I refinance my home NOW or wait?” If you have bought a property in the past two years, every day looks like a better and better time to refinance your mortgage. After the Fed’s big rate cut last month, mortgage rates did the unexpected…they went UP. But, even with these slightly inflated rates, now is looking like a good time to refinance if you bought a home with a higher interest rate. So, should you take the risk of waiting for mortgage rates to drop or lock in these substantially lower rates now?

We don’t know what will happen next, so we brought on veteran lender Caeli Ridge to answer some of our more nuanced questions. Caeli summarizes where rates were, where they are today, and where they could be headed. If you want to know what refinance and HELOC (home equity line of credit) rates are right now, stay tuned because she shares exactly what her clients are getting.

What about paying no or low interest on your next HELOC? Caeli shares what may be the greatest HELOC hack we’ve ever heard of—one that gives you lots of liquidity while keeping your interest payments at the absolute rock bottom. You may have never heard of anything like it, so don’t miss this one!

00:00 Intro
01:52 Interest Rate Update
06:34 Why Rates Went UP
11:59 Should You Refinance?
18:17 Current Refi Rates
19:37 Best HELOC Hack
29:01 Interest Rate Forecast

[sergii_real_estate]

This lady is sharp as a tack! This is such an investors state of mind convo!

[PabloMCanseco]

I'd love a visual infographic on the 0% interest heloc hack

[justlikeasoldier]

In the 50's my late dad worked a modest job, mom was a housewife, and they lived a nice lifestyle including owning a home. Nowadays both I and my partner works and can barely afford to make ends meet. Luckily, I've just received an inheritance of $500, 000 and concerned how to use money I didn’t work for. Should I pay mortgage since I’m still working, or do I invest in stocks rather than just staying 100% cash?

[devon]

Wow, this lady is dropping some serious gems for me!

[frankvator]

In order to truly catch this concept of velocity or volume of interest paid. First understand there’s a difference btw an amortized mortgage scale and TIP total interest paid on a mortgage. Once you realize a 2.99% is actually 51.08% scales will fall from your eyes. Since it’s fixed and front loaded you can only lower it by paying principal payments but have no access to those funds. Unless you refinance which starts the front loaded amortized clock😡
Why simple interest dominates is by having the ability to alter your principal pay down by deposits you normally perform which lowers your balance daily while offering liquidity to payout expenses at the end of the month. In short simple interest is simple not complicated you pay on what you owe daily. The purpose of using credit cards is to calculate or push back using the HELOC until the end of the month so your daily outstanding balance remains low so your interest stays low for bulk of the month. Hence daily average is in your favor.

So to wrap this all up what is higher 7-9% HElOC or a 2.99% 30 fixed? If you said 2.99% is higher you go to the front of the class. 🎉 because this is actually 51.08% based on volume of interest you pay on the early years of your loan.
It’s a vicious cycle… these disclosures are now in everyone’s mortgage documentation by law.

[flyhighmack]

This was soo good!!! I’m gonna have to seriously look at a Heloc moving forward

[RyanIrwinIAC]

Great episode and love the idea of how to exploit a HELOC with the caveat of great power requires great responsibility. 💪

[richardbryant]

Hey Dave, I’m looking for a HELOC product like you and Caeli discussed. They’re hard to locate a HELOC lender with an attached checking account. Is there a way I can connect with yourself or Caeli to secure such a product from your team?

[RobertBullock]

I got a term sheet. I had about 24% equity. They only wanted a little over $20, 000 to get the loan set up. Points plus me to pay down my mortgage more.

[sergii_real_estate]

I big time disagree with moving savings account money to HELOC account, even temporary though, not to pay high interest, its called savings for a reason. What's gonna happen, on the very first financial scrutiny - those money will be left in HELOC and lost from savings, when technically if you weren't moving those - it would put upward pressure on you to pay HELOC down or use those money smart way, so you just losing your savings money.

[charles]

What’s the name of the heloc that if you have the money in a account you don’t have pay any interest rate?

[kylefordinvest]

Great discussion on refinancing strategies!

[davidaizuss]

Ok, but if I use the all in one as a bank account, now I can’t put that paycheck money in a HYSA, so yes interest saved on the heloc, but lost interest in opportunity cost. Kind of a wash and not worth the complexity.

[fx]

Hello, Thanks for the an other great show.

Is HELOC only available properties on individual names or HELOC also available for property owned by LLC?

Thanks

[Aculus]

Why manage the complexity and borrow from the higher interest HELOC to pay down the mortgage if the net result is paying down 1K on the mortgage? If you have an extra 1K to spend why not just pay extra principal on the mortgage? Is there a way to only have the 1K a few days to keep the average daily balance very low, if so that would be ideal, but I don't see it.

[YatesHarrison]

How would the HELOC hack work regarding liability issues and using LLCs to own rentals? Doesn't that strategy pierce the corporate veil?

[Mike_Affholder]

Central banks never cut rates out of the kindness of their hearts. They will only cut rates when the economy starts to come unhinged.

[JonathanExcels]

I have been using this HELOC strategy for years and it works. However, one of the BP lenders recently told me about a strategy that I think might be better.

[OhichiWatanabe]

So which account should I be paying the HELOC out of?

[ausquiano]

Refi a 2.5%? We are thinking of buying a second home, maybe selling our current home with the 2.5 or lease it? What makes sense