Americans Find Themselves Further in Debt - Now What?

Americans Find Themselves Further in Debt - Now What?

CNN’s recent reporting shows Americans once again find themselves further in debt – Now What? As stimulus money has run out, our appetite for debt has not. USA credit card balances rose by $17 billion in just the last quarter and total debt has increased by $1.1 trillion over pre-pandemic 2019 numbers. At the same time, inflation continues to rise and pushes both home and auto prices even higher. So what lessons can we learn from America’s growing debt?

The Debt Hole

Let’s take a look at the debt hole that many are in. As an example, suppose you bought a home in Orange County, CA, in January of 2018 for $420,000 with a 20% down payment and a 30-year mortgage at 3.25%. By making your payments for nearly four years, your loan balance would now be hovering around $310,000. Unfortunately. like many Americans, you have accumulated some credit card debt (family sickness, out of work, car repairs, etc.). Let’s suppose you have accumulated $10,175 in credit card debt, leaving you with minimum credit card payments of $204. In this situation, it will still take you 26 years to pay off your home and over 30 years to pay off your credit cards (at an average interest rate of 18% and making only minimum payments). The good news – you can flip the script and not stay on this plan by reorganizing debt.

Reorganizing Debt

It comes as no surprise that most Americans have some level of debt; in California the average household has $10,175 in credit card debt. While we all would love to be debt-free, that is not the situation many are in. Yet, homeowners today may have a fantastic opportunity to put themselves on a path to become debt-free sooner than they could ever imagine. Let’s look at an example of how reorganizing debt could make this happen.

In this same example, the home purchased in 2018 would now have an estimated value of $558,613. By refinancing into a new 30-year mortgage at 2.99% and taking out enough money to pay off your credit card, you could save yourself an estimated $298 a month in payments (credit card and mortgage payments). Imagine what you could do with that savings? However, one of the most effective, debt reduction options would be to use the savings to pay off your home faster instead of paying the credit card companies. Begin by taking all the monthly savings and paying down the principal balance of your home! Making this one change, which doesn’t even change your monthly budget, would pay off your home in 22 years and four months. This pays off your home nearly four years sooner than the original loan you took out when you bought your home and increase your net worth by $63,291. Click here for details.

Debt Reorganization Expertise

As you can see, there are many factors to consider when reorganizing debt. Refinancing is one option and it would be easy to become overwhelmed during the debt reorganization expertise. The GOOD NEWS – you don’t need to tackle this alone. Let Revival Lending, a Certified Mortgage Advisor, help you! Your dreams are not one-size-fits-all; your loan shouldn’t be either.

Revival Lending, Certified Mortgage Advisors

At Revival Lending, we are Certified Mortgage Advisors. We will work to design a customized loan to facilitate your goals.  We want to earn your business over a lifetime and not just through a one-time transaction. We promise to take the time to truly understand your goals and help you map out a plan to use your mortgage and home to reach them.  Call or email us to schedule a complimentary mortgage review today. You will not be disappointed!

When a Condo is Costing You More Than a Single Family Home

When a Condo is Costing You More Than a Single Family Home

Do you know how to determine when a condo is costing you more than a single family home? For example, did you know that a $580,000 Condo could cost you more to own per month than a $630,000 Single Family Home? I promise, it’s not a trick question. Let me show you when a condo is costing you more than a single family home.

Condo vs Single Family Home

Recently, I had a client who was trying to determine which home to purchase, a condo vs single family home. They wanted to get the best home for their money but not break the bank on their monthly budget. In the end, they narrowed their choices down to two possibilities. 
The first choice was a beautiful $580,000 condo and, the second, was a larger, single family home being sold for $630,000. The neighborhood, space and overall design of the single family home matched their needs better than the condo but the home was on the top side of their budget. For that reason, they thought the less expensive condo would make better financial sense. It sounded like a logical conclusion. 

Financial Review Is Key

However, a financial review is key for a true analysis. After I conducted a complete financial review of the two possibilities, I found the less expensive Condo would have cost them more money per month than the Single Family Home. You might be asking- “how’s that possible?”

The reason – there are more monthly expenses associated with homeownership than just the loan. Besides the principle and interest that will be due on any loan you will also have to pay some combination of taxes, insurance and possible HOA (Homeowner Association) fees. These are not all created equal. For my clients, I knew that the larger loan required for the single family would cost them an additional $290 per month. However, the combination of the higher tax rate in the condo’s city as well as a higher homeowner association fees would cost them an additional $410 per month. That means the condo would actually cost them an additional $120 more per month to own.

Complimentary Financial Review

By reviewing all the financial facts, my clients not only got the house they really wanted but also saved themselves a $120 a month. So before shopping for your next home, give me a call and I will be happy to conduct a complimentary financial review of your situation. #notallbrokersarecreatedequal