The Gap Between Retirement Expectations and Reality

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Today we are going to discuss the gap between retirement expectations and reality.Many people who are still working stress about retirement savings. They think they need a lot of money to retire, but once they retire, they often find that things aren’t as bad as they feared.  Let’s take a quick look!

For example, Americans think they need $1.2 million to retire. However, about half expect they’ll have less than $500,000. This gap leaves many worried about their future. Only 1 in 5 middle-class workers feel very confident about retiring comfortably.

But when you ask retirees, the story changes. Eight in 10 retirees say they’re doing fine. Many people adapt when they retire, figuring out how to live on less than they expected. Retirees report living on around $4,258 a month, which is less than the $4,947 working people believe they’ll need.

The fear of not having enough money can cause people to start Social Security early, even though waiting longer could mean higher payments. But many retirees discover that careful planning and adjusting their lifestyles help them live comfortably.

Retirees often find that lower healthcare costs and moving to a smaller home make their retirement dollars stretch further. Plus, they tend to stay positive, knowing they’ve already weathered big challenges like the financial crisis and the pandemic.

The lesson? Retirement may not be as scary as it seems once you’re there.

Click here to read the entire article.

Do you have more questions about planning for your future? Contact us today!

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3 Things to Think About BEFORE You Get a Cash Out Refi

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A cash-out refinance can be a powerful tool to manage your finances. However, it’s important to make smart decisions before diving in. Let’s break it down into 3 things to think about before you get a cash out refi. This will not only protect your future, but it will also help you  get the best deal.

1. Get the Relief You Need, Not What They Offer

When you’re looking to refinance, make sure you’re getting the relief that you actually need. Sometimes, lenders might push you toward a higher amount or different options that don’t match your goals. If you’re aiming for a specific payment reduction, then focus on getting that number. Do not just focus on what the mortgage person suggests.

Example: Imagine you have a credit card balance that’s eating up $400 a month, and your goal is to free up that cash. Don’t let a lender talk you into taking on more debt than you need. Stick to your goal to reduce your payment without adding unnecessary costs to your future.

2. Don’t Pile On Debt That Hurts Your Future

It’s easy to get caught up in lowering payments today, but be careful not to add a mountain of debt to your future. Taking on too much debt can create stress and financial pressure down the road, affecting your well-being and your family’s peace of mind.

Example: If you currently have a great rate on your mortgage—like 3%—and you’re considering refinancing to a new rate of 6%, think twice. That’s doubling your cost of borrowing, which could mean a lot more interest over the life of the loan. Protect your future by not trading low-cost debt for high-cost debt.

3. Explore All Your Options

Before jumping into a cash-out refinance, look at other options. You might find that a home equity loan or a 0% credit card can meet your needs without adding so much long-term debt. These alternatives can give you the breathing room you need without putting your financial future at risk.

Example: A recent situation showed that a family considering a $290,000 cash-out refinance ended up adding over $230,000 in extra interest over time. Instead, they chose a home equity loan that kept their payments low and didn’t pile on that extra interest burden. They protected their finances and avoided unnecessary debt.

Protect Your Finances and Future

Remember, a cash-out refinance is just one of many tools available. Make sure you’re getting the best solution for your situation, not just the one that seems easy. Taking a little extra time to explore your options can help you avoid costly mistakes and keep your financial health on track.

For more guidance on cash-out refinances or to explore other financial tools, check out our Loan Cost Optimizer. We’re here to help you find the best debt solution for your goals.

Contact us today and watch our most recent video to find out more about the 3 things to think about before you get a cash out refi.

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Cash Out Refi vs Home Equity Loan – Which One is Better?

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Cash Out Refi vs Home Equity Loan – Which One is Better?

Today we are going to discuss the difference between a cash out refi vs home equity loan. In both of the following examples there are a lot of similarities. This includes identical houses, similar lifestyles, as well as $465,000 in debt. Let’s take a closer look at how Jack and Jane can achieve monthly debt relief both quickly and easily.  

Jack Jane
Loan Type Cash Out Refinance Home Equity Loan
New Loan $295,000 (mortgage, auto,  as well as credit cards) $90,000 (auto and credit cards)
Interest Rate 7% 9%
Old Monthly Payment $2,700 $2,700
New Monthly Payment $2,000 $2,000 (Home equity loan payment $800 + Current mortgage $1,200)
Monthly Savings $700 $700
New Debt $720,000 ($2,000 per month  x 360 payments) $476,000 ($2,000 per month)

To clarify, both Jack and Jane both had a monthly savings of $700. However, their lifetime debt is very different. In the end, Jack will pay $244,000 more than Jane. As a result, Jane will get to enjoy life a lot more because her mortgage payment wasn’t altered. 

In conclusion:

To sum it up, both a cash out refi and a home equity loan create a monthly savings of $700. However, a cash out refi comes with more new debt that will follow you for a longer period of time. Which path would you take? Keep in mind that times will change as well as available products! However, the differences between a cash out refi vs home equity loan will remain the same. That is why it is so important to do your research along with listening to the math in order to live your best life.

Watch our most recent clip to discover more and contact us today to find out more! We are here to help you get on the right path for your future! 

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Compound Interest

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Smart with debt
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Cash-Out Refinance: Avoid the $250,000 Blunder Most People Make

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Are you thinking about a cash-out refinance? While it might seem like a great idea to free up some cash each month, it creates further financial strain in the future. Therefore, before you jump in, let’s look at the numbers in order to see how this decision could cost you a whopping $250,000 over time. Let’s begin by looking at the average debt provided by Dave Ramsey. 

What is a Cash-Out Refinance?

To clarify, a cash-out refinance allows you to take out a new mortgage for more than you currently owe, as well as pocket the difference. It’s tempting if you’re looking for some extra cash or want to consolidate debt. However, in today’s market, with interest rates climbing, you might be setting yourself up for a costly surprise.

Cash-Out Refinance
New Loan Interest Rate Monthly Payment New Total (Current Payment $2,669 – Cash-Out Refinance $1,962)
New Mortgage Balance $295,000 7% $1,962 $707 (Monthly Relief)

Cost of Cash-Out Refinance
Monthly Payment Remaining Number of Payments Cost Over Loan Life Additional Money Out of Your Pocket!

 (Refinance Cost $706,550 – Total Cost Previously $454,591 
$1,962 360 $706,550 $251,959

What is a Home Equity Loan?

A Home Equity Loan, on the other hand, is a type of loan where you borrow against the equity you’ve built up in your home. To put it another way, it’s a second mortgage with a fixed interest rate, a set repayment term, as well as consistent monthly payments. Unlike a HELOC, which acts like a credit line, a Home Equity Loan gives you a lump sum upfront that you repay over time. Therefore, it is a stable option for consolidating debt or financing big expenses.

Home Equity Loan
New Loan Interest Rate Home Equity Loan Payment  + Mortgage New Total (Current Payments $2,669 – Mortgage with HEL $1,959)

(Credit cards and auto loan paid off)
Home Equity Loan  $57,500 9% $793 + $1,166 = $1,959 $710 (Monthly Relief)

Cost of Home Equity Loan
Monthly Payment Remaining Number of Payments Cost Over Loan Life + Mortgage Additional Money Out of Your Pocket!

(Home Equity Loan Cost  $461,249 – Total Cost Previously $454,591 
$793 105 $83,287 + $377,962 =

$461,249

 $6,658

Monthly Payment Relief: What Does It Really Cost?

Sure, both options give you that monthly payment relief you’re looking for, however, only one of them doesn’t mortgage your future. Therefore, by choosing the home equity loan over the cash-out refinance, you will not only save big now, but in the long run as well. 

Out of Pocket Difference Between the Two Options 
Cash Out Refinance $706,550 $245,301
Home Equity Loan $461,249

Bonus: Short-Term Impact

Some people say they won’t keep their mortgage for 30 years. However, the financial impact of a cash-out refinance can be seen after just one year! 

BONUS: Cash Out Refinance: Cost By Year 
Year Cost 
First Year $12,975
Third Year $26,987
Fifth Year $42,894
Tenth Year $80,679 + $11,898 = $92,577

Your Best Option in Today’s Market

In today’s market, a home equity loan is often the better choice. It not only provides the monthly relief you need, but it also doesn’t cost you a fortune in the long run. Remember, it’s not just about getting by today, it’s about protecting your future, too. 

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