Thursday, October 30, 2014

5 More Ways to Save $52,000 on your Mortgage Interest


Digging a Little Deeper to Lower Your Personal Overhead

The other day we suggested that you could easily cut your budget by $250 a month, which if applied to your mortgage payments would reduce the total outlay of interest by $52,000 over the 30 years of paying on the loan. This was based on a $200,000 mortgage at 4%.  You can five those 5 easy steps here.

Now, just to put some icing on the cake, here is a another 5 slightly harder ways to get even more savings out of your budget. Use it to pay off your mortgage even faster, invest, or spend on wild living. As with the first five, these won't reduce your quality of life at all.
  1. Shop your car insurance. I recently was able to chop $350 a month on my policy by switching carriers. We have 4 drivers on the policy, so your results may vary. I went with Costco. You should also review your other insurance policies annually to make sure you have the coverage you need, and to see about savings on rates.
  2. Speaking of Costco. The savings by purchasing your groceries and other items at Costco are real and significant. Costco marks up all items by 15%. What they buy for $10.00, you pay only $11.50.  Most discount department stores mark up from 50% to  double.  So you would pay $15.00 - $20.00. I know you have to buy huge quantities. I have found nooks all over the house for storing commodities. I have an extra freezer, too. Small cost for huge savings.
  3. Amazon Prime. When it isn't a Costco item, why not buy on Amazon Prime?!? Pricey toothpaste, supplements, household items and more are almost always cheaper on Amazon than at Target or CVS. And there is no freight and no auto expense. When you need more, you have a record of what you bought. 
  4. Get rid of any high interest credit card. Use the savings from these other suggestions to first pay off all credit cards with interest rates higher than your mortgage interest rate. The only good use for a credit card is to build credit. Pay them off every month.
  5. Get rid of one expensive, useless or worse, habits. Smoking, buying booze in bars, fast food, gambling (including lotto.)  
There is potentially a lot more than $250 a month in savings in this list. Just number five could be $250 or more for many folks.

You have now saved $250 from list #1 and $250 from list #2, now you might want to invest that $500 in some rental property. Call Bill Rayman for an analysis of what you could afford.

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Tuesday, October 28, 2014

How to Save $50,000 or More on Your Mortgage

 Pay an extra $250 per month to save $52,000 over 30 year loan

Now that you have the answer, think about how you could use $52,000. Amazingly, if you just let the money ride, you will pay off the 30 year loan in just a tad over 20 years.  This estimate is based on a $200,000 loan at 4% interest. Now that was the easy part. Doing a math calculation to determine your potential savings is simple. Where will you find that $250 per month could be a more difficult question.

Here are 5 ways that you could potentially get $250 a month in savings without reducing your lifestyle in any significant way.

  1. Call your cable TV provider. Tell them you are considering going off grid or switching to satellite. If you have satellite, call the provider and tell them you are thinking of switching to cable. Watch the dance begin. You are very likely to end up with at least $20 or more in savings. Now call the competition with your new rate and see what they will do. You are likely to end up with the same or better rate and a $200 gift card for switching. 
  2. Go off the grid on cable. Between Apple TV, On Demand, NetFlicks, RedBox, Amazon Prime, and other TV offers, it is hard to justify any upgrades to basic service on cable or satellite. 
  3. On to your cell phone, internet, and land line providers. This gets a bit more complicated, but the cost of all of this is dropping fast. By changing providers, bundling, unbundling, and just shopping, you are very likely to end up saving another $30 a month and improving MBPS. Recently I tried to end my land line service, but the bundle cost less with it that without. 
  4. Saving on your utilities. The water company (at least in California) will be happy to help you cut down your water use. Check with your supplier to find out how to get free or reduced costs products to reduce use in bathrooms and irrigation. Then check to see what the recommended water needs are for your yard. The electric company will help you with lighting and other wasy to save on electricity. LED lights are fantastic and save a huge amount of money. Switch appliances to natural gas to save even more.
  5. Budget. Keep a penny by penny ledger of all expenses for three months. There are many online tools that can help with this process. Once you see where the money is going, you will almost certainly be able to find ways to cut that won't hurt even a little bit. 
 Reducing your interest expense to create $52,000 is based on saving $250 and putting it towards your loan. That is a great way to save and to help with being disciplined about saving. You could potentially make even more money by investing the savings in various types of investment vehicles. With your mortgage at 4%, paying down the mortgage may not be the best use of the funds. However, it may give you the most peace of mind.

All of the above assumed your mortgage was 4.5%.  If it isn't, you need to call Bill Rayman and see if you can save money by reducing the interest rate on your current mortgage by refinancing. There is no cost of obligation for the free consultation with Bill. 

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Monday, October 27, 2014

Changing Mortgage Market - Should You Use Broker, Mortgage Banker, or Bank?

Bank, Banker and Broker - What's the difference in 2017?

By: Selene Garcia
As you move through the mortgage process, you may have been inundated with information about the mortgage and banking industry and from your vantage point, a lender is a lender. However, in an effort to offer clear, simple mortgage education, Guaranteed Rate wants you to know not every lender is created equal. Distinguishing the differences between banks, mortgage bankers and mortgage brokers can save you some frustration, time, and in some cases, money.

As a mortgage banker and broker, Guaranteed Rate understands how the following types of financial institutions impact your mortgage financing. Let’s take a look at the characteristics of each:

Banks are typically local brick-and-mortar financial institutions which offer mortgages as well as traditional banking services, such as checking and savings accounts, along with other financial services such as wealth management and investment advising. The law requires that banks use a percentage of their deposits for lending purposes.  Interest earned from loans allows a bank to lend money for many types of loans such as: auto, personal and mortgage.

  • Competitive rates.
  • Physical presence for servicing issues.
  • Flexible lending due to long-term business relationship.
  • One stop shop for all of your financial needs.
  • Conservative lending guidelines.
  • Limited loan options.
  • Lengthy processing time.
  • Underwriting and appraising managed through national channels vs. local channels.
It is important to know bank mortgage advisors are often not well-versed on all possible mortgage lending options and do not have the lending flexibility of a banker or broker. The reason for this is two-fold: bank employed mortgage advisors are not required to attain federal mortgage licenses and are usually limited to the mortgage products their bank sells. Additionally, unlike true licensed loan officers (who are employed by bankers and brokers), mortgage advisors from your local bank earn a salary and do not have to cultivate consumer relationships.

Mortgage Banker
Mortgage bankers are a one-stop mortgage shop of sorts. With access to lenders such as Fannie Mae, Freddie Mac, Wells Fargo and Chase, bankers are able to offer a vast array of home loans such as Conventional, Jumbo, FHA, VA and USDA. Unlike banks, mortgage bankers concentrate solely on mortgage lending without the distraction of other lending products or personal finance services. They typically employ in-house underwriters and loan processors; however in this case, in-house loan processing translates into accelerated loan processing – this allows them to close loans within 30 days or less.
  • Competitive rates.
  • Variety of flexible loan options.
  • Swift loan processing.
  • One-stop mortgage lending shop.
  • Local Appraisers.
  • No other financial instruments.
  • No physical presence for servicing issues.
  • No flexible lending due to long-term business relationship.
When you conduct business with mortgage bankers you are working with federally licensed professionals. Licensed loan officers have chosen to sell mortgages as a career and are well-versed in lending laws, lender guidelines and are 100 percent vested in counseling you, structuring your loan and closing the deal.

Mortgage Broker
Mortgage brokers are federally licensed firms or individuals who sell loan programs on behalf of lenders. Loan officers who work for mortgage brokers facilitate your search for the most suitable mortgage product and structure your loan to suit your financial goals. The main difference between a mortgage broker and mortgage banker is that mortgage brokers do not process any loans – every loan is sent to the lender for processing. Additionally it is the lender, not the mortgage broker, which provides the funds for your loan.

  • Competitive rates.
  • Flexible non-traditional loan programs.
  • No in-house loan processing.
  • No physical presence for servicing issues.
  • No flexible lending due to long-term business relationship.
Interestingly, a broker and banker can be one in the same. So here is where it gets tricky, from a consumer’s perspective, a broker is anything that is not a brick and mortar bank; however, from an industry perspective, this is how the two are defined:
Mortgage Banker: Lends you money using a warehouse line of credit and processes your loan.
Mortgage Broker: Sends your loan file to a lender who will lend you money and process your loan.
If the two types of institutions are combined, the consumer can benefit with a wider variety of mortgage financing options.

What about online lenders?
Online lenders are structured as both bankers and brokers. The only difference is, all of their business is conducted online. You will not meet face-to-face with your loan officer and you will securely submit all of your loan documents electronically.

The type of financial institution you choose should suit your financial needs and goals, offer a competitive rate, employ seasoned mortgage professionals and provide top-notch customer service.

Thursday, October 23, 2014

Thinking of Buying a Condo for Your Residence or for an Investment?

Buying Condos 101

By: Selene Garcia
While a great investment, Guaranteed Rate wants you to know there are some rules you should be aware of in order to ensure a smooth loan process.

Condominiums are a great way for a first time homebuyer or new investor to enter the market; however, there are some lending rules you should be aware of before you sign a contract.

Lenders consider several variables when underwriting your loan; however, a lender’s main concern is whether or not the condo building is warrantable. Condo warrantability will differ between existing condo buildings and newly constructed condo buildings.

When addressing the warrantability of a condo building, the lender wants to know:

About any pending lawsuits against the association. A lawsuit is a red flag and you should quickly learn the details of the lawsuit before signing any contract or making any offers. As a general rule, slip and fall suits along with foreclosure suits will not kill your loan. Structural defect suits are an issue and before proceeding you should talk with your mortgage professional.
No lawsuits = Warrantable Condo Building

How many units are rented to non-owners. In the case of rental percentages, there is a difference between a new condo building and an established condo building.
A new condo building requires at least fifty-one percent of the units are sold to owner occupants and forty-nine percent can be rented units.
Established projects will in excess of forty-nine percent rental units, provided, you are occupying the unit you are purchasing.

Within the allowable occupied/rental percentages = Warrantable Condo Building
If the building allows blanket mortgages. Blanket mortgages cover two units under one mortgage. This is typically not an accepted practice; however, you should speak with your mortgage professional as there are many components and you may be within the guidelines.

Association does not allow blanket mortgages = Warrantable Condo Building
How much money does the association’s reserve fund contain.  If you are putting less than twenty-percent down, the lender will want to review the association’s annual budget. The lender wants to ensure the association has savings (or reserves); the requirement is ten-percent of the budgeted annual income.

Association has required reserves = Warrantable Condo Building
While the height of the condo building has no bearing on warrantability, its best to let your mortgage professional know your preference. Some lenders prefer not to lend in projects that are too high (more than 8 stories) or contain too few units.

 When shopping for a condo, be sure and ask the seller about pending lawsuits, rental occupants, blanket mortgages and the association’s reserve fund.  It’s better to know whether or not you are looking at a viable building to purchase in or if you should move on to the next.

Ready to look into a condo purchase? Interest rates are back in the historic low category again this week. You can buy a $300,000 condo today with $60,000 down and have total mortgage cost at under $1200 a month.

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Friday, October 10, 2014

Renting Better than Owning? Maybe - If Not for *#!!X#! Landlords

After 50 years of reform, landlords still hold most of the cards

According to a bunch of punditry over the past six months, Millennials are questioning whether they will every buy a home. They've just witnessed their parents and friends get wiped out by the housing crash, prices in many neighborhoods seem beyond the pale, and job insecurity is a major fear. Some even like the idea that they are not going to be surprised by major roofing, plumbing, or other upkeep expenses that come with home ownership.

On the other hand! Try to find any of these folks who really like their landlord. I know one poor soul who seemed to have a great relationship with her 70+ widow landlord. Sure the old gal wasn't quick to make repairs, and was not remotely gracious about late rent, but she seemed sweet and honest.

That all changed when it came time to return the deposit after the move out. The landlord charged $135 to remove a coat rack and curtain rod that had been left as a courtesy to the next tenant, who later decided not to keep them. There was another charge for carpet cleaning, even though the carpet had been meticulously spot cleaned and all that was cleaned would fall under normal wear and tear.

And this was a friendly landlord who was otherwise a decent owner. The point of the story was not to show a horror tale, but to show that the downside of renting is the almost certainty of painful and expensive transactions with the landlord.

Sure, this tenant had the potential to arbitrate or sue in small claims, but most landlords know that the cost in time and money to pursue a few hundred dollars on the deposit is going to keep most tenants from acting.

My suspicion is that most millennials will tire of living under the thumb of difficult owners, and eventually see the benefit of controlling their own destiny.