James Whitener

Arizona Loan Officer

FED Update & Remembering Directions Before Navigation

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FED Update

Yesterday the FED released their minutes from their March Meeting and in a rather rational move they left things somewhere in the middle.  It seems as though some lawmakers think that under certain circumstances that rates could be increased.  However, others think that it could shift in either direction.

I realize this news doesn’t really give any insight into expectations for rates.  It does tell me though that we can expect rates to rise and fall in small increments and we shouldn’t see any major movement in rates for the remainder of 2019 unless there is a major increase in the economic outlook.

Today’s rates are up slightly by 19 basis points (for those not familiar with this terminology it means that rates are up 0.0019%).  To put that into cost terms for you that means if you were to get a $200K loan, the cost of your rate would be up about $380 at closing (or reduce your credit by $380 at closing).  It could also mean a slight in crease in your rate by about 1/8 of a percent (going from 4.5% to 4.625%).

Remembering Directions Before Navigation

On to a little more fun topic that I’m sure some of you can relate to.  I was driving yesterday to an appointment with a realtor that I have yet to do business with.  I was slightly familiar with the area but not enough so that I didn’t need directions.  If you’re wondering, the meeting went great!  I’m excited to say I may have found a new partner that has as much passion for the industry as I do and I can’t wait to work with her to get the absolute best for our shared  clients.

How Things Have Changed…

While driving it got me thinking about the days without GPS.  No navigation in the car (which mine doesn’t have as it’s a 2004 Tahoe and they didn’t offer that feature then), no smart phone or smart watch to guide you.  It got me thinking about the days of having to ask for directions, right them down… look at maps and draw out your path.  I reminisced about the days of getting lost and frustrated because there wasn’t a quick and easy solution to re-route yourself to get back on track.

Being in the real estate industry I am constantly driving to new places and going to meetings in unfamiliar areas.  Without google maps and navigation life would definitely be more complicated. I would most likely have added stress and frustration.  Now, I don’t think all technology has made life easier.  I can’t imagine I’m the only one to get frustrated at self-checkout in the grocery store.  When my computer isn’t working properly it feels like the end of days.  However, in this one instance it was humorous to think about the days when directions weren’t fun, especially for those of you not good at taking or giving directions.

Things Could Have Been Different?

I can’t help but wonder if we had this technology years and years ago when I was young.  It would have prevented my father and I getting lost in Los Angeles when I was 5 or 6.  This was the trip that turned a former smoker back into a smoker. Maybe with this new technology he’d still be a non-smoker?  Who knows but I am thanks for the ability to have a device that tells me where I’m going without having to ask someone for directions.

Have a wonderful weekend! I hope to be your mortgage guy when you are in need of some directions when it comes to a loan for your new home or refinancing your current.

Will Bi-Weekly Mortgage Payments help you?

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Is there a benefit to making bi-weekly mortgage payments?  Absolutely!  However you have to be careful and do some homework about your current bank before committing to do so.  Some banks offer this as an option and others do not.  That isn’t to say you can’t set this up yourself but you have to do it properly.

What is the benefit?

The one major benefit of making bi-weekly payments is you are in essence making one extra payment per year.  If you are making monthly payments you are making 12 payments annually.  If you make bi-weekly payments (52 weeks in a year) then you are making 26 payments.  This works out to making 13 monthly payments throughout the year.  The savings to you are massive as you are reducing your term by roughly 7 years and can save you huge on the interest on your home.  For specific savings you can look at Bankrate’s comparison calculator HERE.

What to be Careful with..

There are companies that will process payments like this for you, however, in most cases they are charging a fee to do this.  You would only consider this option if your bank doesn’t currently offer a bi-weekly payment option.  Your first step is to call your bank and ask if they offer this option.  Also, be sure to ask if your bank has a pre-payment penalty on your loan as you don’t want to incur penalties for doing this.

If your bank doesn’t offer bi-weekly payments your best recourse is to do a little math (take your monthly payment and divide it by 12).  Once you have that amount you can either save that monthly and make that payment once throughout the year.  Your other option is that you can pay that amount every month on automatic payments. Be sure that no matter the route you decide to go that you are selecting “principal-only” when choosing how to apply that extra payment.

 

If you have any questions on this process or other ideas you have about paying your loan off early please feel free to contact me at anytime!

 

Mortgage Jargon Explained

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Like many other fields and industries the mortgage world has it’s jargon.  Unfortunately for you and unlike most other fields this one is important for you to understand.  This may very well be the biggest decision you make in your life.  With that being said, it’s of the utmost importance that you understand what some of this means.  Here are some of the more used terms and acronyms.

 

Arrears

This basically means you have “defaulted” on your loan. You have missed at least one payment.  In this scenario it is extremely important you stay in contact with your current lender.  Don’t hide from this.

DTI (Debt-To-Income)

DTI is the ratio of your income to the debts (all revolving and loan debt combined) you currently carry.  There are a lot of factors here as some loans carry a debt-to-income ratio as high as 58% and some have a much smaller ratio.  It is important you know these ratios when considering what loan program you choose versus your goals and other financial factors.

Equity

The amount of ownership stake you have in your home.  It is the down payment and principal you have paid while in the home.  This is effectively the investment you have made in your home.

LTV (Loan-To-Value)

LTV is the ratio of your home’s value to the size of the loan.  Much like DTI each loan program carries a different LTV requirement or maximum.  It is imperative to know what these requirement are and if they fit into your needs before moving forward on any one program.

PITI (Principal, Interest, Taxes and Home Owners Insurance)

PITI is the acronym for all of the costs added together to make your whole mortgage payment.

Prime Rate

The prime rate is the interest rate charged by banks to the most credit worthy customers.

There are a lot more words and facts that you should know going in to this transaction.  Click HERE for a list of more and do your homework before you get into this process, you’ll thank yourself later!

If you are ready to move forward and want to know what you qualify for, CLICK HERE and let’s start that discussion, go through all of your ratios and find a loan program that matches your wants and needs.  There is a program out there that’s right for you but that does take work.  There isn’t a one size fits all program, let’s talk today!

 

How Do You Know You’re Ready To Buy?

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This is one of my favorite topics and I have seen a lot of people tackle it.  In my opinion it’s very simple.  You are ready to purchase a home when you feel the need to have a place that’s actually yours.  When you’re done paying someone else’s mortgage.  It’s time when you have decided you can handle the responsibility and want to grow wealth.

A lot of people feel like there are parameters that you must fit into before starting to think about making this leap.  It’s not your job to concern yourself with all the details.  I’m not saying throw caution to the wind and go buy whatever you want and don’t concern yourself with your credit score.  What I’m saying is leave the details to a mortgage professional.  You may be ready to purchase now but maybe your finances or credit needs some work.

We as mortgage professionals aren’t here to only help those that qualify.  Our responsibilities are so much more than that.  Our job is to help you get the details right once you are ready to buy.  It doesn’t matter how long that takes, there is absolutely a way to get you into a home!  Don’t wait and don’t stress about what the details of your situation are.  I promise any good mortgage professional has seen it all before.  Once you know you want a house… let us help you get ready to buy a house.

Don’t sweat the small stuff… that’s what we get paid to do!  Call us today and let’s find out if you qualify… you calling is all we need to know that you’re ready.

GET QUALIFIED TODAY!

Do you LOVE your Mortgage?

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Admittedly, this is a dumb question.  Of course you don’t.  However, this being Valentine’s day with all the love in the air it seems appropriate to speak of love.  In my business though it’s more like are you content with your mortgage or are you unhappy?  Moreover, are you in love with your house, content with your house or unhappy?

The Deeper Question

A lot of this situation really comes down to your finances and your wants.  Are your finances in a place where your mortgage makes sense?  Is the home your living in exactly what you want (or pretty close) or are you still using your current home as a stepping stone to get to that dream house?

Your Plan

What is your plan if you can answer no to any of these questions?  Have you sat down with a trusted financial adviser?  Have you spoken to a mortgage professional to weigh out all of the options you have to reduce current payments, maximize equity or just flat out look for a new home?  Do you have a trusted realtor that can help you with market trends and set expectations?

Where to Start

Where do you start in all of this to get to that place of contentment in your living situation? Is it your job, is it your pay, is it your budget or lack there of, is it your house… so many questions!

Simple Advice

The easiest solution to all of the questions is start somewhere.  Talk to a financial adviser, a mortgage professional, a realtor, your partner… start somewhere and build a plan.  It doesn’t matter if you are a home body, jet-setter, a workaholic… you’re still going to have to have a place this is yours.  A home that is functional but comfortable.  A house that fits your needs and feels safe.  A place that you’re excited to show off and gleam every time you walk through the front door (or garage entrance door like most these days).

Life and Love

Life is fleeting and you deserve so many wonderful things, don’t wait to find love and don’t wait to live the life you want.  A lot of that starts at home and most homes start with a mortgage.  Let’s get you to answer yes to that dumb question, love your mortgage as it leads to loving your dream home.

The 15 Year Myth

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The 15 year myth has been going on for a while mostly fueled by Quicken Loans.  They have been sending out content via social sites and commercials saying that the new fad in Mortgage is to have a 15 year loan.  While the 15 year loan is a great option in certain situations but is NOT for everyone.  In fact, in most cases it is not your best option.

There are definitely some advantages to a 15 year mortgage. The primary advantage is that it will save you a ton of money on interest over the life of the loan as it cuts your “term” in half as compared to a 30 year loan. A 15 year loan usually has a lower interest rate because you are a lower risk to the bank.  However, there are a lot of factors in life that can change your financial well being. A 15 year loan can put you into a situation where you have now locked yourself into a higher payment and don’t have the flexibility to lower your payment.

Let’s take a look at what I mean by that.  Let’s say you’re getting a $270,000 loan and putting 10% down which makes for a purchase price of $300,000.  We are going to use today’s par rates for a conventional loan and that you have a 680 credit score.

By the Numbers

30 Year Loan – Rate = 4.5% and has a principal and interest payment of $1,368.05

15 Year Loan – Rate = 4.125% and has a principal and interest payment of $2,100.15

The total interest you paid on the 30 year loan if you didn’t make any additional payments or pay above the minimum would be $222,498.12

The total interest you paid on the 15 year loan if you didn’t make any additional payments or pay above the minimum would be $92,540.24

 

You saved yourself $129,957.88 by going with a 15 year loan.

In Conclusion

However, as stated before we all know that life can put a lot of barriers and speed bumps in front of you.  What happens if you locked yourself into a 15 year loan.  You still have to make that $2,100 payment every month.  Where as, if you went with the 30 year loan but made the payment every month like you were on the 15 year loan you can still save yourself almost the same amount of money but if you were to lose your job you can reduce the amount you’re paying every month from $2,100 to $1,368.

I’m not saying you shouldn’t save yourself the money. I’m saying you should treat your 30 year loan like it’s a 15 year loan and make that monthly payment when you can (and hopefully that’s the full term). Now when life throws you a curve ball you have the flexibility to reduce your payment.  Now you have not put yourself in a situation where you have to drain your bank account, possibly need to sell or even refinance because you locked yourself into a higher payment and didn’t stay flexible.

I hope you found this information helpful and gives you food for thought when considering what term you want to go with.  Again, i’m not saying the 15 year loan shouldn’t be an option but it is a very situational loan for those who have a lot of extra monthly income and are in a situation where they have a sizable nest egg to be able to get through those major speed bumps that can and do happen.  Please feel free to call me to discuss or click the link below and submit your information to find out what loan term is best for you!

 

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