Dennis' Mortgage Blog

August 19th, 2016 1:20 PM


Question of the week: What are Fannie Mae, Freddie Mac and Ginnie Mae?

Answer: Last week we answered why if you have a Fannie Mae loan you do not make your payment to Fannie Mae. So what is Fannie Mae, its brother Freddie and cousin Ginnie?

Before we get to what they are and do, let’s get to the names. Fannie Mae is the nickname for the Federal National Mortgage Association (FNMA). Freddie Mac is the name used for the Federal Home Loan Mortgage Corporation (FHLMC. Ginnie Mae is the Government National Mortgage Association (GNMA). It is easy to see how Fannie and Ginnie got their names looking at the initials, not sure who or how Freddie came out of FHLMC.

Fannie and Freddie are “government sponsored entities,” or GSEs. The definition of a GSE is a private corporation that is created by Congress. You can purchase stock in Fannie and Freddie and they operate like other private corporations. During the mortgage and housing market melt-downs last decade the U.S. Secretary of Treasury Henry Paulson put Fannie and Freddie into conservatorship, taking control of the GSEs. As part of the take-over, the Treasury supported the two companies with approximately $100 billion each in exchange for preferred stock. Since then both GSEs have repaid the Treasury significantly more than the funds put into the companies.

Why do Fannie and Freddie exist? Last week I wrote a bit about secondary markets and Fannie and Freddie acting at clearing houses or conduits between investors and borrowers. That is the reason both exist, to provide liquidity to the mortgage markets. By having a central entity to provide standard underwriting guidelines and purchase mortgages that meet those guidelines from borrowers mortgages become cheaper for borrowers to obtain, thus expanding the opportunity of homeownership. The central entity also allows for more money to be available for residential lenders since they do not have to hold onto the mortgages they fund but can sell them to Fannie Mae thereby having more funds to make future mortgages.

When you hear about “conventional” or “conforming” loans they are referring to Fannie and/or Freddie loans. These are loan underwritten to the guidelines established by Fannie or Freddie (while similar there are differences in their guidelines).


On the investor side, when an investor purchases Mortgage Backed Securities from Fannie or Freddie they know that the loans in their investment have been underwritten to specific guidelines.

Ginnie Mae is different from Fannie and Freddie in that it is not a Government Sponsored Entity, but is a government owned corporation. Ginnie acts in the same manner as Fannie and Freddie but instead of conventional loans from the private sector, Ginnie issues Mortgage Backed Securities of government insured mortgages, primarily FHA and VA mortgages. The purpose and result is the same as with Fannie and Freddie: provide more efficient movement of capital from investors to lenders to expand availability of funds for mortgages thereby reducing costs to borrowers and expanding homeownership.

Because Ginnie Mae is part of a government agency (Department of Housing and Development, HUD) its security issues are backed by the full faith and credit of the United States Treasury—essentially making them guaranteed investments without risk since the U.S. government is guaranteeing all interest and principal payments and the U.S. government has never defaulted on a payment obligation; there is some risk but the risk is that the federal government will go into default.

It is estimated that about 90% of mortgages in the United States are from either Fannie Mae, Freddie Mac or Ginnie Mae with several trillion dollars of mortgages currently outstanding.

Next week we will continue the series on how mortgages work by looking at pricing and rates of mortgages for borrowers and the following week will conclude the series with a look at how those rates and prices are determined by the financial markets.


Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Housing is dragging the economy along, thankfully. On Tuesday the Consumer Price Index for July was released and the report was not good. Prices were flat from June to July and from last July to this CPI increased on 0.8%--well below the Fed’s 2% target rate. Housing prices increased 0.3% for the month and are up 2.4% for the year, helping keep prices from going negative were medical care prices which were up 0.5% for the month and 4.0% from last July. For people looking to purchase a home and monitoring their medical insurance and expenses there is no surprise in the increases in either category. The news is extremely mortgage rate friendly as flat prices indicate a stagnant economy and continued low rates.

Rates for Friday August 19, 2016: Rates continue to lie on the floor and there is little evidence that they will get up any time soon. Take advantage of these rates!


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.25% Flat
30 year high-balance conforming 3.50% Flat
30 year FHA 3.00% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have may have no points and credit towards closing costs, changes daily.



I guess when you have polarizing political candidates and world-wide athletic games with obligatory scandal both going on at the same time it can be hard to make the news. The tragic flooding going on in the Baton Rouge area of Louisiana however should push aside politics and at minimum share the media stage with the Olympics. The historic rain fall and flooding has created a tragic situation for those in the region and it seems it is of little interest to most Americans. Perhaps if there were wide spread looting and pillaging the networks might send a few cameras to the area….You can help, and it is needed. As always the Red Cross is a major supplier of needed items, from temporary housing to food and water to comfort.

If everyone who receives the Weekly Rate & Update makes a $25 (tax deductible) contribution to the effort that would be over $15,000 to the Red Cross for its needs in Louisiana. Here is the link if you are willing to contribute.

Thank you for your contribution, have a great week,


Dennis

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Posted by Dennis C. Smith on August 19th, 2016 1:20 PMLeave a Comment

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August 12th, 2016 11:45 AM




Question of the week: I have a Fannie Mae loan, why am I not making my payment to Fannie Mae?

Answer: It has been a while since we did a review of how the mortgage rate markets work and with many new readers of the Weekly Rate & Market Update time for a primer on interest rates and mortgages. This will be the first in a several part series covering how mortgage markets work, how rates are decided and the relationship between rates and points.

At their core all loans are alike, they are a liability for you and an asset for someone else, your monthly expense is someone else’s monthly revenue. Whether a credit card, auto loan, student loan or mortgage the mechanics are essentially the same—you borrow money, agree to pay a certain rate of interest and to pay an agreed upon payment by a certain time.

After this basic lender-borrower relationship things get a bit complicated with mortgages. Long gone are the days of you getting your mortgage from your local bank and then going in on the first of each month and paying at the teller window. Today, it is almost certain that whoever funds your mortgage will not be the owner of the mortgage after a short period of time, and there is a good chance that someone else will end up collecting your mortgage payment in the future. Why? Because of “secondary markets.”

Here is how the secondary markets work. Note, for this exercise I am using Fannie Mae, however Freddie Mac or Ginnie Mae could be substituted for Fannie Mae wherever mentioned.

First from the borrower’s side: You call me at Stratis Financial and indicate you are buying a home and need a mortgage. We go through the application process and the result is we fund a $400,000 conventional, Fannie Mae mortgage for the purchase of our home.

We then sell the loan and the “servicing rights” to a large lender. (Servicing is the act of collecting payments from the borrower.)

The lender then puts your mortgage into a “bundle” with other mortgages. When a bundle is big enough, say $30 million of mortgages, it is then sold to Fannie Mae, with the lender retaining the servicing rights.

Fannie Mae then issues a bond type instrument called a Mortgage Backed Security (MBS) that is sold on the open market to investors, which could be individuals, insurance companies, hedge funds, mutual funds or pension funds (for instance in 2014-15 fiscal year CalPers held approximately $800 million in MBS).

From the investor’s side: You are looking to diversify your investments and want to purchase an investment with a fixed rate of return and less risk and volatility than many stocks hold, essentially a bond type investment. Looking at the returns on U.S. Treasury offerings and Mortgage Backed Securities you see a higher rate is paid on the MBS investments. You invest in MBS investment with rate of return of 3% on Fannie Mae mortgages. Every month you receive a payment for principal and interest on your investment.

Your investment income is paid by Fannie Mae with funds received for the mortgages in your investment from the servicer of those mortgages. The servicer receives the funds to pay Fannie Mae from individual borrowers making the monthly payments on their mortgages.

So the mortgage payment from the homeowner in Lakewood, California can ultimately be received by an individual investor in Des Moines, Iowa, or a government pension program in Brisbane, Australia.

You may have a Fannie Mae loan, but Fannie Mae does not own your mortgage, that is owned by an investor elsewhere. Fannie Mae is the conduit that provides capital, i.e. money, from investors to lenders so they can fund mortgages for homeowners. They are then the conduit to pass the homeowner’s monthly mortgage payments from the lenders to the investors. Instead of individual investors striking separate deals with thousands of lenders for their mortgages a more efficient market is created by investors purchasing MBS from Fannie Mae and lenders selling their mortgages to Fannie Mae.

The advent of the secondary markets had several positive effects for homeowners: standard underwriting across the country, more access for mortgages since you are not limited to your local bank or credit union, tremendous liquidity in the market so there are always funds available for mortgages and ultimately because of all these factors cheaper mortgages for homeowners.

It may not be the proper analogy but think about the mutual funds you own in your retirement account. Rather than going out and doing the research and purchasing stock in hundreds of different companies, collecting dividend payments and then reinvesting in the stocks, constantly analyzing the companies whose stock you own to see if they are performing as you expected and allow for the proper diversification in your account, you simply purchase shares of different mutual funds that have different objectives. The mutual fund then does the heavy lifting of determining which companies best fit the objective, switching investments through the years, and collecting and distributing dividends, etc. Similar to how mutual funds have made investing cheaper and more efficient for investors, so too have the secondary markets made obtaining home loans for investors cheaper and more efficiently.

For a look at how Mortgage Backed Securities started I strongly suggest watching The Big Short, or reading the book penned by Michael Lewis (who has several good books on financial markets and companies).

Next week we will look at Fannie, Freddie and Ginnie.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Negative economic data closes the week. After a strong increase in wholesale prices in June (up 0.5%) a complete reversal in the Producer Price Index in July, dropping 0.4%, puts doubt into the strength of any economic growth. Year over year wholesale prices are down 0.2%. The news is very friendly for lower mortgage rates.

Wholesale prices were not the only July disappointment. Retail sales for the month of July were virtually flat, 0% increase. Consumers spent money on automobiles but little else, taking autos out of the data and retail sales dropped 0.3% from June. This news is of concern as consumer spending accounts for 60-70% of economic activity in the United States, slumping retail sales can be the harbinger for future economic contraction. The flat retail sales in July is positive for mortgage rates.

Rates for Friday August 12, 2016: After a sharp spike in rates late yesterday Mortgage Backed Securities markets settled back down today on the poor economic news. Perhaps the best thing you can say about interest rates is, “they are boring…” Rates remain unchanged from last Friday and where they have pretty much been for the past six weeks.


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.25% Flat
30 year high-balance conforming 3.50% Flat
30 year FHA 3.00% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have may have no points and credit towards closing costs, changes daily.



The Smith home is whole again with the return of our daughters from their four weeks at camp. How quickly the rhythms and energy can change when two teenagers are return!

I don’t know about you but the Olympics are giving me some sleep deprivation as I stay up well past my normal bedtime to watch incredible feats of athleticism and exciting finishes! I’m sure I’m not the only wishing NBC would put their pre-taped coverage of the big events earlier in the evening—of course those who want those events as late as possible are the ones paying the bills for NBC.

Enjoy the games!

Dennis

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Posted by Dennis C. Smith on August 12th, 2016 11:45 AMLeave a Comment

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August 5th, 2016 10:56 AM


Question of the week: We are thinking about selling our current home and buying a new one, is this a good time?

Answer: We’ve been this question a lot lately as we run numbers for clients to determine whether a refinance of their existing mortgage makes. “We don’t know if we want to stay here much longer….” or some variation is the lead to the question, is now a good time for us to sell our home and buy a new one?

Families who have outgrown their first home, couples near retirement looking to down size for retirement or young couple looking to move out of their condo into a house, asking “should we refinance or buy a new home?” After discussing options, what-ifs and objectives some are deciding to move up their future purchasing time line and finding what they need on the market. Is this something you should do?

Last week we addressed if the sharp rise in home prices the last few years portends another housing bubble. So if you are considering moving in the future, later this year, next year, the year after….should you move sooner, i.e. today, rather than later?

Here is a chart that shows the median home price in June for 2014, 2015 and 2016 and the interest rate for 30 year fixed rate loan (20% down, 740 FICO score, 1.25 points—what is quoted each week in the Weekly Rate & Market Update). What if you asked the should we buy now question in 2014?



Looking at the interest rate and monthly payment of the 2016 median price it appears that if you waited from 2014 or 2015 to purchase a home you made a good decision because you were able to purchase a higher priced home for a lower rate and affordable payment. But that is too casual of a comparison. Keep in mind this is the median home, so pretty much the same home you could have purchased in 2014 or 2015 for a less cash out of pocket and a smaller loan to pay off over the 30 year mortgage. As well, those who purchased in 2014 or 2015 have probably refinanced their mortgage, lowering their payment significantly.

Those who purchased the median home in 2014 have built equity and purchased for less cash out of their pocket than if they had waited a year or two to purchase.

Looking forward, rates are at all-time lows and home prices are rising as a steady pace. If you are considering buying a new home in the new few years consider the long term cost of higher price for the same home you could purchase today requiring higher down payment, and probably a higher interest rate on what will be a higher loan amount.

Yes, it is currently a seller’s market, but if you are a homeowner you will be the seller in the seller’s market before you become the buyer.

If purchasing a new home in the future is something you are considering give me a call and we can discuss your options, risks, benefits, etc so you have more information before making such an important decision.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Some very important economic data this week. First was the release of Personal Income and Consumer Spending for July. Personal income rose for the second month in a row, up 0.2% from July, weaker than expected but positive nonetheless. Consumer spending increased 0.4% for the month, dipping into savings as the consumer spending rate dropped. Year over year prices are well below the Fed’s inflation target rate, up 0.9% for all prices and only 1.6% if food and energy are taken out of the data. The news is mixed for mortgage rates, the positive consumer spending gives a bit of a push higher to rates, however the tepid income and inflation numbers give support to low rates.

July’s job report was released this morning. The data shows a strengthening job market with 255,000 jobs added to the economy last month. Also in the report was an uptick in the labor participation rate and an increase in the average work week for the first time since January. Overall the report is positive for the economy and as such puts pressure on mortgage rates to move higher. On the strength of this report the chances of the Fed to increase its discount rate at its next meeting in September are pretty high, especially if August employment figures are as strong as July’s.

Rates for Friday August 5, 2016: Rates hold on this Friday despite the positive jobs report news. I keep waiting for a technical breakout and profit taking but so far investors are content to let their money ride in the bond markets.


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.25% Flat
30 year high-balance conforming 3.50% Flat
30 year FHA 3.00% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have may have no points and credit towards closing costs, changes daily.



How times have changed department. Our internet, phone, television crashed this morning at home. My standard Friday is to put out the Weekly Rate & Market Update from the home office and no internet could be a problem---or it would have been a few years ago before our phones were able to become mobile hot spots through which we can connect other devices to the world wide web machines. Dating myself, when I started in this business we hand wrote applications, had to mail in requests for credit reports and wait a week or more to get the reports. Everything was sent to lenders using special couriers. Now we get upset if our internet connection takes fifteen seconds to connect to the MLB.com website to see if the Phillies scored in the top of the 9th.

Enough of the “back in my day…” remember today is someone’s back-in-my-day several decades hence.

Have a great week,


Dennis

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Posted by Dennis C. Smith on August 5th, 2016 10:56 AMLeave a Comment

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July 29th, 2016 3:35 PM


Question of the week: With home prices as high as they are do you think we are facing another housing bubble?

Answer: No.

Last week’s data on median sales prices in Southern California resulted in this question being asked a few times. To recap the California Association of Realtors reported last week that the median price of homes in Los Angeles County is up 6.1% from June 2015, Orange County is up 6.0%, Riverside up 6.1%, San Bernardino up 6.0% and San Diego up 4.4%. Home prices have seen strong, and significant growth the past few years, but have not approached the growth seen in the early 2000’s that led to the top of the market in 2007.

Before I get into the fundamental reason for my answer, let’s take a quick look at the history of the bubble. Starting in May 2001 we say the median price for a detached home in the Greater Los Angeles Metropolitan Area increase by the following increments from May to May: ’01-02: 18%, ’02-03: 17%, ’03-04: 23%, ’04-05: 12%, ’05-06: 7%, ’06-07: 9%.

The highest median price in the LA Metro Area was $578,700, in May 2007. The subsequent lowest median price was in April 2009 at $227,400, a drop of 61% for the area in two years.

In the eight years since the nadir the median price has increased to $477,200, and increase of 109%. That is a large increase over an eight year period---however in the eight years prior to the apex of the median price the increase was 187%, with 138% growth from 2001 to 2007. So the growth rate is not approaching the rate during the bubble.

Since 2009 regional median prices have only increased by double digits in one year, from June 2012 to June 2013 when they increased 25% after dip in prices the prior years.

So from a statistical growth stand point the increase in prices are not of “bubble” character.

But more important than the size of the growth is the underlying fundamentals of the growth that lead to my feeling we are not currently in a housing bubble scenario.

There are several factors that went into the housing bubble that popped in 2007 but by far the primary reason was the easy money available for home buyers that exploded the demand side of the market. We received approvals from Fannie Mae that required no income verification, no asset verification and no appraisals—money doesn’t get much easier than that.

Included in the easy-money category was the prevalence of equity lines of credit taking total loan to values to 100%, or more, of the property value. A significant percentage of properties being purchased, or refinanced, were with very little to no money down. So while the property values were rising there was not a corresponding increase in homeowner equity.

The mortgages that have supported the rise in property values since 2009 are extremely high quality mortgages. Almost all homebuyers getting mortgage have been underwritten to more challenging standards than were seen since before the advent of stated income mortgages. Borrowers must verify their income, all sources of funds for down payment, closing costs and reserves, loans are priced based on credit scores—and therefore risk, and appraisals are completed by non-interested third parties with no communication with loan originators.

Furthermore, overwhelmingly mortgages that have been funded in the last eight plus years have been 30 or 15 year fixed rate mortgages. It is rare to see a client who wants, and qualifies for, a five or seven year fixed rate mortgage that then becomes adjustable, and the straight monthly adjustable mortgage is pretty much a thing of the past.

When it comes to refinancing very few homeowners are pulling out equity to purchase consumer items such as boats or cars or to payoff consumer debt. Almost all our refinances have been to lower rate and payments, consolidate an equity line with their first mortgage, or to shorten the term of a mortgage to fifteen or some cases ten years.

A bubble is usually characterized after the fact as the market that bubbled collapses. The current housing market is solid enough that if prices do contract there is little to suggest prices will drop significantly due to the underlying fundamentals: homeowners have equity in their homes, their mortgages are fixed rate with very low interest rates, they are able to afford the payments today and most likely in the future.

In the bubble build up we often felt like we were financing investments for clients who happened to be living in them. Today we are helping families purchase their homes with future value, while important, being secondary to a home that is affordable with stable payments.

The greatest risk to the housing markets and prices today is employment. As long as a family has steady income they can afford the mortgage on their home today, tomorrow and a decade from now.

Home prices have increased nicely over the past few years, but far from the rate that would indicate a bubble. As well the increases have been supported by homebuyers purchasing with quality mortgages that will be paid on time for a long time. These factors mitigating any future price collapse absent a major decline in employment in the region or nation.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Not great economic data this week, which may give some ammunition to the politic races the next few weeks. Durable goods orders, an indicator for manufacturing and employment, dropped for the second month in a row, down 4% in June and 6.4% from 2015. Mirroring the drag in durable goods was the initial report for 2nd Quarter Gross Domestic Product showing only 1.2% annual growth in the quarter which follows only 0.8% growth (revised) in the 1st Quarter. These economic indicators give no support for higher interest rates for mortgages.

Rates for Friday July 29, 2016: Rates retain their low levels from last week on this week’s economic data. Any increase in rates will most likely be generated from technical trading, i.e. profit taking, and should be short lived if they do increase. Take advantage of these rates!


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.25% Flat
30 year high-balance conforming 3.50% Flat
30 year FHA 3.00% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have may have no points and credit towards closing costs, changes daily.



Thanks for all the messages and notes last week about your own travels through California, up the historic and beautiful highway 1 and other adventurous routes and suggestions for sustenance and/or beverage stops along the way! As I mentioned last week a trip all the way up the Pacific Coast Highway to the Oregon border, or beyond, is one everyone should make at least once—and preferably once a decade. Now we are home and looking at the calendar and next Sunday when our girls get back from their month long adventure at camp.

Have a great week,


Dennis

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Posted by Dennis C. Smith on July 29th, 2016 3:35 PMLeave a Comment

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July 22nd, 2016 7:07 PM


Question of the week: Do you have a method to pay off debt without using our home’s equity?

Answer: Continuing our series on refinances and whether to take any cash out, as I mentioned last week this week I will go through process that I have used with many clients over the years to pay off their consumer debt.

First and foremost to pay off debt is to quit growing debt or maintaining the same spending habits. If you are serious about being consumer debt free modify your spending otherwise you will be hamster in a wheel except with your income and debt relationship---always paying debt but never paying it off.

Then you have to have a budget as to how much you are paying out every month on credit cards, auto loans, student loans, etc. Let’s say your budget for this is $1200 per month and the total of the minimum payments on all the debt is $900 per month. In the past you have been “shot-gunning” the payments to add a little extra to each credit card while paying the required minimum on auto and/or student loan (let’s say auto and/or student loan total $350 per month).

You have four credit cards with balances and minimum payments of $12,000 at $240/mo, $9500 at $190/mo, $4,000 at $80/mo and $2500 at $50/mo for total minimum payments of $560 per month plus the auto and student loan for total minimum payments of $560 per month so your total minimum payments are $560+$350=$910 leaving you an additional $290 per month to pay down on principal balances.

Your instinct is to pay down the highest interest rate card first. Ignore your instinct and instead follow this plan and if you stick to it you will find yourself paying off all your debt faster.

I call it the Roll-Up plan. Concentrate your extra payments every month on your lowest balance, then roll that payment and the extra you have been paying on the next lowest debt, then roll that payment plus the first debt paid off and the extra into what is now the lowest debt, keep doing this until all our payments are being used to pay off your highest debt.

Example: In all these examples the auto and student loans will only have the minimum paid on them. So you will have $1200 - $350 = $850 for paying on credit cards.

To start pay the minimum on the $12k, $9.5k and $4k credit cards, total amount of $510. This leaves $340 in your credit card budget, pay all of it on your $2500 card. Keep doing this until that card is paid off, which will happen in about 8-9 months.

Success, one card paid off and out of the way. Now make minimum payments on the $12k and $9.5k cards totaling $430 and pay the balance of your credit card budget on the $4000 card for a total payment of $850 monthly budget less $430 minimum payments leaving $420 on the $4000 card. Now this card will be paid off in 10-11 months. In less than two years you have paid off two credit cards and wiped out $6500 in consumer debt.

You can see how this is going, now we have just two cards left and pay the minimum of $240 on your biggest balance and focus $610 on what was your $9,500 card (after two years probably down to around $9000) and this card should be paid off in 15 months.

You are now down to one credit card with a balance of around $11,000 and you are paying $850 per month on the balance, paying off the card in approximately one year.

From not making any in-roads to paying off your $28,000 to having it all paid off in less than four years. Seems like a long time, and it is, but consider your auto loan is probably five years, student loan more than ten and your mortgage is thirty years—and all of those carry lower interest rates than you credit cards.

As you go through this process the minimum payments on all the cards will drop incrementally, by staying with the minimum payments on all cards that are not the focus of the pay-off you will accelerate the time frames to pay off the cards you are targeting for pay-off. We have put together this plan for clients and were looking at about four to five years to be paid off on all consumer debt and most get it down in almost half the time. Once you get started you begin to alter your spending habits and become focused on paying off that one card….and then the next one…and then the next one.

Like a diet, exercise regimen or earning a degree paying off debt requires two things: consistency and commitment to the objective.

If I can be of assistance to you in planning your become debt free please contact me, I’m happy to show you where to start.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Party like its Two Zero Zero Seven. Existing home sales nationwide built on May’s increases and rose 1.1% in June—the highest monthly gain since February 2007. Year over year sales are up 3.1% with condos up 3.2% in sales. Prices were not shrinking in a market with strong sales, nationally the median price increased 3.7% and are up 4.7% year over year. This news is somewhat mortgage rate unfriendly as it not only puts demand on mortgages but also shows strength in this very big piece of our economy.

In Southern California the data is eye-popping. Per the California Association of Realtors, Los Angeles County’s median price is $502,190, up 6.1% from June 2015; Orange County median is $759,490 up 6.0%, Riverside up 6.1% to $357,810, San Bernardino plus 6.0% to a median of $245,220 and San Diego sees 4.4% year over year rise in the median price to $594,430. For those who live in LA and Orange County your home is worth more, but if you have been considering pre-buying your retirement home in the desert or mountains that home has gone up as well (if you are interested in pre-buying for retirement call me to discuss options and strategy). When prices go up with this rate it is not unusual for appraisals to lag the market so be prepared when purchasing or refinancing for some potential soft valuations that may need to be appealed with more recent sales data.

Rates for Friday July 22, 2016: A tick down in rates from last Friday. With the slow economic week trading has drifted within the range we have established over the past several weeks. Next week some big economic data, most notably 2nd Quarter GDP, which could prove to be rate movers. Now is not the time to float your rate and try to beat the market.


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.25% Down 0.125%
30 year high-balance conforming 3.50% Down 0.125%
30 year FHA 3.00% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have may have no points and credit towards closing costs, changes daily.



The Weekly Rate & Market Update is coming to you from beautiful Benbow, California (for those up on their California geography it is just south of Garberbille). Leslie and I are on our traditional summer road trip while the girls are at camp in Minnesota. We have driving up Pacific Coast Highway with stops so far in San Luis Opispo, Monterey, San Francisco, Ukiah and now Benbow. It is a fantastic journey with so many different vistas, geology, topography, flora and fauna. We head into Oregon today before turning south and meandering back to Long Beach. This is a trip everyone should make at least once, and perhaps more than once!

Have a great week,


Dennis

Posted in:General
Posted by Dennis C. Smith on July 22nd, 2016 7:07 PMLeave a Comment

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