Typically, when you think of a financial planner, your mind goes right toward thinking of the stock market. When you are hiring or working with a financial planner, it's essential to consider that they offer a holistic approach to your situation.
Our industry's problem is that everyone wants to get paid and move on to the next client. At Financial Enhancement Group, we believe everyone has a unique situation, and everyone has different needs. Today we are going to discuss all-time lows… Not in the stock market, but mortgage rates.
I sat down with Chris Rodgers, Associate Advisor of the Financial Enhancement Group, to discuss what people should consider in this all-time low mortgage rate environment. Chris, a graduate of Anderson University, has a 4-year tenure in the mortgage industry from being a banker before joining Financial Enhancement Group in 2019.
When I asked Chris what families should consider doing in this market environment, he said, “The biggest things families need to consider is refinancing. Look at your mortgage statement, and if the rate is above 3.50%, it's time to talk with a financial professional.” For the families that we take care of, refinancing has always had somewhat of a negative connotation to it. Keep in mind; refinancing does not always mean long-term. Chris also said, “In this rate environment, I've seen a lot of our families not only reduce their interest rate, sometimes in half, but also reduce their term as well, meanwhile getting a lower mortgage payment! That, in the finance world, is what we would call a no-brainer.”
Financial planning is more than just stocks and bonds; it is about your unique situation. It is answering questions like, “How should I fund this home improvement?”, “How should I pay for this repair?”, “Should I pay in cash or finance?” I asked Chris what else our families should consider, maybe those who already have their house paid off. Chris said, “It's never a bad idea to have a home equity line of credit available. It is going to be one of the cheapest ways to finance a large expense, with flexible payments. It's one of those financial tools that hopefully you never have to use, but if life happens, and it does, then you have another tool in your belt to make the best financial decision.”
All-time lows sound scary, and they can be! However, it is important to look across the board at your financial situation, not just the stock market. All-time lows in the mortgage industry have continued to allow folks to buy homes that may not have been able to afford one prior. They have also allowed millions of homeowners to save thousands of dollars by refinancing. Today, 30-year rates have crept back above 3%, but that is nothing to shake a stick at relative to mortgage rates in 2008, which averaged around 6%.
Chris's final words for our readers were, “Always have someone in your corner. Not only a friend or a loved one but a financial professional who can look out for you. I have the pleasure of being a fiduciary and serving our families. If you don't have someone in your corner, reach out to us. We believe everyone deserves a fiduciary.”
Joseph A. Clark is a Certified Financial Planner and Managing Partner of The Financial Enhancement Group, and an SEC Registered Investment Advisor. This article was co-authored with Chris Rodgers. Contact Joe or Chris at yourlifeafterwork.com or 800-928-4001. Securities offered through World Equity Group, Inc. Member FINRA/SIPC. Advisory services can be provided by the Financial Enhancement Group (FEG) or World Equity Group. FEG and World Equity Group are separately owned and operated.