Home Refinancing Your Mortgage Can Save or Start a Business

Refinancing rates are at an all-time high, making it a financial tool that can help you save your business or work on a start-up enterprise.

An Industry report shows that at least two million refinancing deals were signed from January to April 2020, many taking advantage of cashing out part of the equity. The 30-year mortgage rate fell below three percentage points, which is the lowest in the last 50 years.

The term mortgage loans never sounded so good, as home buyers and lenders alike saw transactions still alive and moving in the industry. Before they signed the dotted line, people saw the mortgage as a way to make their dreams come true: owning a place they can call home. Now, they look at refinancing as an opportunity to keep that dream alive, and perhaps a way to have a new vision like starting a business.

Refinancing has overtaken the number of home loans recorded by lenders. This development is not surprising given the economic situation brought about by the global pandemic.

The surge in coronavirus infections has left cities in lockdown, with businesses like restaurants and cinemas shuttered and millions getting the pink slip. This seemingly dire situation is not confined to the US alone but has struck every major city around the world. In a globalized economy, no country has remained untouched by the pandemic in terms of public health and economic activity.

Yet it does not have to be a doom-and-gloom scenario.

Many remain upbeat, ever-conscious of opportunities that still abound even when it seemed that the world had been turned upside down. With a new mindset, steeled by their experiences, and hoping for better days — people are making strategic decisions on their mortgage that will not only let then survive the pandemic, but it will help them thrive amidst it all.

Strategic Use of Equity

house equity conceptTrooping to their trusted lenders, optimistic homeowners file the documents for their 30-year mortgage. They have already set their sights on other goals. With a strategy in mind, they will take out a portion of their equity and will use it to make more money.

Some will talk to their stock market analyst-friend to check which stocks they should invest in. Several people are joining the Netflix and Shopify stock bandwagon. With 16 million new subscribers and counting, the video streaming company Netflix saw its stock rise to a historic 158%. Online mall operator Shopify, for its part, gained an awe-inspiring 235% in stock price.

Still, others who want their own brand have seen e-commerce as a new venue for business adventure. Like the 1840s California that became famous for the Gold Rush, cyberspace is now recognized as a virtually limitless space for online resellers.

Numerous platforms online now allow businesses to be set up in mere minutes with just a few clicks on a mouse. With equity money, one can research the most sold items online and start offering them in one’s virtual shop.

Even as brick-and-mortar stores close, new online shops are being opened every second. It is a free-for-all in cyberspace for those who have the best products to sell to customers, quite literally, from across the planet.

From Renovation to Real Property Income

Then, some will use the money withdrawn from their equity for home improvements. Some will start with replacing the roof, others will change the floors, and a few will make changes to their plumbing fixtures and countertops. All these are being done not to please the homeowner’s aesthetic sense alone. They are simply enhancing their homes for a push into the room or home rental business.

Those with a larger fund to work with should consider upgrading to green technology and sprucing up the kitchen and living areas. In an era of social media, an ‘Instagrammable’ home for rent is always a sure-win.

There are many options if a homeowner chooses to start a rental business. For those with a second home, converting that into a real estate source of income is easier. With adequate renovation and a suitable agent, introducing the rental property to a ripe market will be easy. More and more people are considering downsizing and moving to a rental home or apartment.

Those who only have one house that has many rooms can start a Room-to-Let operation. There are also stories of people who made 5-star hotel rooms out of their den or garage, making these spots good enough to command reasonable rental rates.

While at it, it may be wise to consult an accountant to figure out the tax implications of a rental business. It will always be a good move to generate more income, but knowing the tax rates and how it will affect cash flow is a business necessity.

To sum it up, opportunities are everywhere. A mortgage is an obligation that must be paid faithfully. If played right, it can also be a source of income for unusual times that call for a lot of optimism and practicality.

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