3 Reasons Why You Should Refinance This Summer

Whoever coined the phrase, “Make hay while the sun shines” was onto something­­­­—summer is the absolute best time to tackle those projects (or vacations) you’ve been putting off.

And while there are many valid reasons for delaying said projects, a lack of funds shouldn’t be one. Especially when we’ve come up with 3 sure-fire reasons to act now.

 

Eliminate PMI

 PMI, or Private Mortgage Insurance, is a form of insurance lenders implement to reduce the risk of loss on low down payment mortgages. By removing PMI, you can save hundreds, if not thousands of dollars each year.

However, you must have at least 20% equity in your home to do away with PMI. You can ask your lender to remove the PMI when you’ve paid down the mortgage balance to 80% of the homes original appraised value.

If you aren’t quite at 80%, it might be a good idea to refinance. Not only can you remove the PMI, but you might be able to lower your monthly mortgage payments and still pull out some equity for a project or a much-needed vacation. Score!

 

Fund Your Remodel

First things first: You must make sure the refinance plus the remodel doesn’t cause your mortgage payment to increase or extend your payments past your existing pay-off schedule. Then and only then should you take to your kitchen cabinets with a jackhammer in hand.

For example, you have $10,000 in mind for your remodel and currently have a 30-year, $200,000 mortgage at a 6% interest five years ago. As it stands, your monthly payment is ~$1,200, (excluding insurance and taxes) with a remaining balance of $186,109.

Here’s where the magic happens­­­­—you would take a mortgage out for $196,109 with an interest rate of 2.5% for 25 years, making your new monthly loan payment $982. And voila, you not only pay your home off as scheduled but also save money while doing so.

 

Say Goodbye to Debt

Debt is completely normal and something that many homeowners accumulate over time but becomes a serious problem if your monthly budget is affected. But fear not, having equity in your home can put you on the right track to becoming financially comfortable again.

Similar to the example above, you can pull out $10,000 to pay off debt while simultaneously lowering your mortgage payment and still pay it off on time. Have significantly more debt? No problem! You can withdraw more money and break even on your mortgage.

No matter the situation, your home equity can do the work for you. Your home is an investment and now is the time to cash in on the rewards of home ownership.

Contact us today to see if a refinance makes sense for you. We can work with you on countless scenarios and find the best solution that works for your situation.


Are Mortgage Rates Influenced by the Presidential Election?

Thinking of buying a home?

If you’re thinking of buying a home, it’s prudent to know if current events have any impact on the direction of mortgage rates. After all, the direction of mortgage rates means you can buy more house for the same money if they go down, or less if they go up.

Does the outcome of the presidential election have any influence on mortgage rates? Up? Down? Remaining the same?

Mortgage Rates Are Determined by the Federal Reserve

Mortgage rates are determined by the Federal Reserve, which meets about eight times a year and looks at economic data. If the economy looks strong, they may decide to raise rates. If it looks weak, rates are sometimes lowered to stimulate the economy.

The governance of the Federal Reserve, which determines the direction of interest rates, was designed in part to remove it from partisan politics. Although the president of the United States nominates the chair of the Federal Open Market Committee (FOMC), they serve for four-year terms and cannot be replaced. In other words, the inauguration of a new president does not coincide with the ability to name a new Fed chair, although that will happen down the road, when the term is up.

The governors of the Fed serve 14-year terms, and also cannot be removed. That means, for example, that the overall governance of the Fed cannot be removed because an incoming president doesn’t like their monetary policies.

Federal Reserve

It’s the Economy, Not the President

The ultimate determinant of interest rate direction and thus mortgage rate direction is the economy, not who sits as president.

Rates currently are at historically low levels, making this a good time to buy a house.

A recent survey of economists showed a consensus that the economic picture would be strong in November 2016, with low unemployment and good consumer confidence.

However, the consensus on the direction of interest rates has changed several times this year, with an unexpectedly weak job report and the British vote to leave the European Union affecting plans to hike.

The best bet is to stay tuned to the economic news.

 


Saving money: Tips and Tricks that are almost too Easy

Saving money is hard, actually the only hard part is allowing time for your money-saving tips to take effect. Many money-saving tips and tricks are so simple and easy, you should not have a problem implementing them into your daily life. The problems arise when those tips are not followed regularly. The biggest, and best money-saving tip anyone can give is this, choose one or two money-saving methods that you are going to use, and make habits out of them. In other words, keep it up and keep it regular. Now here are those, ‘almost too easy’ saving money tips and tricks:

Use Cash When you Shop

Instead of pulling out your debit cards and credit cards when you go shopping for groceries, clothing, or anything else, use cash instead. Set aside a certain amount of money for everything you have to buy for the month/week. Why? Because it is harder to spend money when you have to physically count it out and hand it to someone. Swiping a piece of plastic is much easier, and makes it harder to save money. Use cash and save your money in the long run.

Donate to Savings Every Week

This is a very simple tip, but it can be hard to turn it into a habit. Simply donate a small amount (the same amount) to your savings account each week. Choose a day, at the beginning or the end of the week, and make it a part of your weekly routine to transfer $5, $10, $15, or more into your savings account. Make sure you donate the same amount each week, unless you donate more – never donate less.

Use a Piggy Bank

This may seem childish, but saving your pennies can add up over time. Even if you only save $10, you can put that amount in your savings that week, and then you have an extra $10 for fun. This is also an easy tip because you can simply empty your pockets every day into your at-home bank. It may not be a get-rich-quick solution, but it can help you to save money.

If you would like to learn more about ways you can save money, please contact us today.


Mello-Roos Tax Assessments: What You Need to Know

The Community Facilities Act—also known as Mello-Roos—was enacted by the California legislature in 1982 to enable local governments to create Community Facilities Districts (CFDs) in order to obtain additional public funding . Named for the tax Act’s co-authors Sen. Henry J. Mello (D-Watsonville) and Assemblyman Mike Roos (D-Los Angeles), counties, cities, special and school districts, and other authorities use CFDs to pay for certain public works and services.

The Mello-Roos Act simply provides local governments with another way to obtain funding after Proposition 13 restricted local governments’ abilities to increase property taxes in order to finance public facilities and services in 1978. Mello-Roos differs from Proposition 13 in that in that Mello-Roos taxes are equally applied to all properties whereas Proposition 13 tax limits are based on real property values.

Community Facilities Districts (Mello-Roos Districts)

Property owners in a CFD are subject to a special tax to enable the district to obtain public funding through bond sales for certain infrastructure improvements and/or services.

Tax Uses

Mello-Roos taxes are paying for services and facilities such as:

  • Police and fire protection
  • Emergency services
  • Recreation programs
  • Libraries
  • Parks and open space
  • Museums and cultural facilities
  • Flood and storm protection
  • Hazardous material removal

Facilities purchased with Mello-Roos funding must have an estimated useful life of at least five years in order to qualify.

Tax Assessments

Individuals who purchase homes in a CFD are subject to Mello-Roos assessments which are commonly collected with general property taxes. Whereas the tax amount may vary each year, it may not exceed the maximum amounts specified upon creation of the CFD, which are recorded along with the method of apportionment (density, construction square footage, acreage, etc.). Homeowners will continue to pay these taxes until the bonds’ principle and interest—and administrative fees—are paid, but not longer than 40 years.

Finally, as the Mello-Roos tax is assessed upon the land, changes in property values will not affect the amount if the property is subsequently sold; however, unpaid or delinquent payments require settlement before any sale because the tax is recorded as a property lien.

For more information about Mello-Roos or any other California property questions, please contact us.


3 Great Online Tools for Money Management

In our search to bring you the very best sites online to help you with your money management, we turned to the experts themselves. The following three sites have helped millions of people to get a handle on their financial ‘big picture’, make a budget they can live with, and even get out of debt. Best of all, each one of these sites come highly recommended by experts in the field of money.

Mint.com

This site comes with a hearty recommendation from Kiplinger and boasts of helping more than 20 million people with their finances. It’s free to sign up, although it is unclear as to whether or not there may be fees for certain services once you get started.

What Mint does best is help you get all your financial information together in one place. Yes, you have to give them access to your bank accounts, credit cards, bills, and any other information you want help in tracking, but rest assured that they offer bank-level security. Your information is safe with them in what Kiplinger refers to as ‘bond-movie-like fashion”.

Once they have all of your information in one place, they can help you finally get a handle on exactly where your money is going. Then they can offer ideas and help to get that same income to go even farther.

Readyforzero.com

This site is another that comes with a Kiplinger recommendation. The goal of this site is a simple one: to help you become debt free. Once again, you begin by giving them access to your finances. They then help you make a customized plan to pay off your debt, and easily track your progress. They even give you access to a free credit score and the ability to watch your score improve as you follow your plan. Best of all, this site is very upfront about being totally free to join and use.

FlexScore.com

This site’s recommendation comes from Forbes. Probably the easiest of the three sites to use, you simply complete a profile with them (the more information you give them the more accurate your financial picture). Once your profile is complete, they will give you a FlexScore and then give you some actionable steps to take to improve that score to get more out of your financial life.

Any one of these three great online tools for money management will help you get a grasp on your finances, so why not start with one of them today? Whether you are saving for a new house or just wanting to get the freedom of being out of debt, managing your money is the key. Of course, if the new house is your goal, we hope you’ll contact us when you are ready to take that step.

Disclaimer: The material provided on this website is not intended to be your only source of information when you are making financial decisions. Pacific Mortgage Group is not a financial advisor. The information provided should be treated as a guide only and it not a substitute for independent professional advice. You should seek independent professional advice relevant to your particular circumstances.


What is happening to the Home Loans Market?

A 2013 survey (Belden and Russonello, America-in-2013-Final Report.PDF) showed that the demand for home ownership is very high, in spite of various difficulties experienced by the housing market. Most believe that home ownership is a good investment for them. Seventy percent of renters hope to buy homes within five years. Many people who own homes are looking for larger homes.

Demand for homes:

Qualifying for a home loan is part of the life cycle of Americans. The youngest generation (age 28 to 34) show the strongest preference for mixed use urban communities in the city. They want walkable communities and public transit. When people move into the 35 to 47 age group (the married and child-rearing phase), they begin to prefer to buy single-family homes. The older baby-boomer generation have diversified into a wide range of housing sizes and communities. They generally feel settled, except that some want to move into smaller homes with shorter transportation demand, close to parks and far from neighbors.

The need for home loans is a constant through all the varieties of location and need. According to the survey,

Living in a single-family house is…related…to their stage of in life. It is a goal that Americans move closer to as the age, marry, and earn more.”

Young adults in the millennial generation are heavily burdened by student loan debt.  A Wells-Fargo survey found that a majority of millennials (54 percent) describe debt as their biggest financial concern. Forty-two percent of millennials say their debt is “overwhelming.” Of the millennial generation 64 percent financed their education with student loans. This contrasts with baby boomers, of whom only 29 percent financed their education with loans, during a period when tuition costs and fees were much lower.

Millennials in the marketplace:

When millennials are ready to finance a home, what is the home finance market like for them? In 2013, 30 year-olds were as likely to be stuck in their childhood bedrooms as they were to own their own home. The job market was especially hard on millennials with unemployment rates at 14 percent for that group between 2007 and 2010. For many, saving and handling student debt were very hard.

With  the gradual recovery of the job market, the “household formation rates” (how many new household units–home buying units–are being formed) has reached close to normal levels. Normally this would signal a normalizing housing market. However, the people forming new households are disproportionally not millennials.

Surprisingly, even with improving conditions, the share of adults in the millennial age range living with their parents has continued to rise. The rate at which millennials get married or live with a partner has been decreasing for many years now, independent of the recession. Millennials, employed or not, are more likely than ever to live with parents and not form independent households. The increases in household formation is coming from older adults. Many feel that fewer households entering the home buying market is due to later marriages and not-good-enough jobs, as well as student debt.

Preparing Better Mortgages to Tempt Millennials:

The worry felt by many borrowers has to do in part with hidden costs of the mortgage. Over the last few years, the household lending industry has been borrowing the practice of Total Cost of Ownership from industrial management practice. Total Cost of Ownership (TCO) was popularized for business in 1987. The Total cost analysis in mortgage lending enables lenders to explore what their resources can afford in a home mortgage. This analysis treats home ownership as a cost-benefit proposition.

Looking at all the factors that go into mortgage cost gives purchasers a sense of closure and allays fears of the unknown. As will any Total Cost of Ownership calculation, the total mortgage cost analysis begins looking at all the factors that go into the cost of the mortgage:

  • Mortgage attributes–for a fixed rate mortgage: loan amount, loan term, and interest rates. For a variable rate mortgage: periodic rate cap, lifetime rate cap, months between rate adjustment, etc..
  • Down payment–the larger the down payment, the smaller the total mortgage costs. Recent government regulations permit down payments of 1 percent. What would such a small down payment mean for total cost?
  • Discount points–upfront fees paid to the lender.
  • Other closing costs–a multitude of upfront expenses for inspections, legal and document fees, surveys, etc..
  • Private mortgage insurance–usually around $55 per month for every $100,000 borrowed, until the remaining principle falls below 80 percent of the home’s fair market value.
  • Income tax ramifications–some mortgage expenses may be tax-deductible.

Pacific Mortgage Group makes it easy and stress-free for you to find a mortgage option that truly fits your needs. Our mission is to match you with the best possible home loan package so you can achieve your financial goals. Please contact us to learn more.


Discover Why Conventional Home Loans May Be the Best Option

Have you been trying to figure out which home loan is right for you? Well, if you have good credit, and have taken the time to save for buying a home, then a conventional home loan may be the best option. The main benefit is a conventional home loan will save you money.

The main advantages of FHA home loans and other government-backed mortgages include (1) the qualifying credit criteria is lower, (2) the amount of your required down payment is less, and (3) refinancing is easier. However, these benefits have a cost. You can end up spending much more, both with your monthly payment and over the life of the loan.

Down Payment

FHA home loans require as little as 3.5 percent as the down payment. Of course, the lower down payment means more of the sale price is financed. Your monthly mortgage payment is higher, affecting your payment-to-income ratio and loan approval. The higher financed amount also means paying thousands more in interest over the life of the loan.

Private Mortgage Insurance

When you place 20 percent or more down on a home, you are not required to pay for mortgage insurance. This insurance reimburses a financial institution if the home goes into foreclosure. The premium is added to your monthly mortgage payment, also affecting your payment-to-income ratio.

Mortgage Rates

Since FHA and other government-backed mortgages have lower credit standards, there is a greater financial risk for banks and mortgage companies.  This translates into higher interest rates. Since conventional home loans have higher credit standards, they offer better rates.

More Options

Conventional home loans provide more flexibility with payment terms. FHA home loans have either 15-year or 30-year terms (some lenders can be more flexible). Conventional loans have options that can help you pay your mortgage off earlier and save thousands in interest.

If you would like to talk more about why a conventional home loan may be the best option, or need more information, please contact us.


Fitness to Maintain Your Back

Of course, everyone is aware that we need to exercise and make fitness a part of our life, but how many people actually find time in their schedule to do it. Many people may not realize they are more likely to experience lower back pain if they don’t exercise. Lack of exercise usually causes weight gain which is just one cause for the aching back. But there is another link between lack of exercise and back pain. When you exercise, you are strengthening the muscles in the part of your body that supports your whole frame. So, strong muscles help keep the back from experiencing pain.

Approximately 60 – 80 % of adults in the U.S. complain of back pain, making it the second most common reason for a doctor visit. Another source puts the number of people who suffer from back pain problems at 65 million. It’s definitely an issue that has affected not just the sufferers, but our whole society; employers estimate a $7.4 billion/year loss due to workers age 40-65 who are suffering from back pain issues. If you are one of the many who have acute or chronic back pain, here are 4 natural back pain remedies to try that will pave the way for your fitness goals.

Stretching

Stretching the muscles is a great way to start your day. Just how does stretching make a difference for back pain sufferers? The back is made up of muscles, tendons, and ligaments referred to as soft tissue. The soft tissues all need to move or they tend to tighten up; with the restricted movement, pain results. As you begin to stretch those muscles again, slowly working the tightness out, you will see back pain subside. Your range of motion will be greater, too. Stretching is a must after strength training also.

Yoga

Yoga involves holding very specific body positions in place that target the back and abdomen muscle groups. These muscle groups aid in supporting the spine, so when strengthened, lower back pain is eased. Yoga is also a great exercise for strength building or muscle toning.

Improve posture

You have probably heard it before – “stand up straight or you’ll hurt your back.” With the various sedentary job positions, many people must work at proper posture. Poor posture puts a strain on the back muscles and spine. If not corrected, it will lead to further problems with the back and neck. Correcting the posture is a simple way to keep the muscles, ligaments, and discs in alignment and free from back pain.

As people make fitness a lifelong partner in their life, they become more productive and happy. If you would like more information about Pacific Mortgage Group, please contact us today!

References: http://www.spine-health.com/wellness/ergonomics/good-posture-helps-reduce-back-pain


Tips on Owning a Home: It’s More Than Just the Mortgage!

One of the most common misconceptions about home ownership is that you simply buy a house, pay the mortgage every month, and call it a day. However, the reality of owning a home is that it costs a lot more than just the mortgage!

In this blog post, then, we’re going to go over the full list of expenses that come with owning a home so that you can decide if you’re in the market to buy a home, or to continue renting as you’re currently doing.

  • Insurance: many lenders, especially from the so-called “big banks,” will require you to have homeowner’s insurance before giving you a mortgage. This premium varies from state to state, and different environmental factors — such as your area’s propensity for hurricanes, earthquakes, and flooding — can drive the price up significantly.
  • Property Taxes: again, this is an inevitable cost. Now, there are some mortgages that allow this to be built in — and paid — from the monthly mortgage payment, but in the end, this will also drive your monthly payment up to more than you thought before. Like insurance premiums, property taxes vary from state to state, and are dependent on the value of your home.
  • Utilities: you thought you had the “utilities” thing down pat when you were living in your first studio apartment, but the reality is, the utilities go up tremendously when you’re trying to heat, water, and provide electricity to a home with a few thousand square feet. Make sure you budget accordingly!

For more information about us and our services, contact us today.


Discover How to Save Money for a House

Saving money for a house can feel like an insurmountable goal. A down payment and closing costs will be in the thousands. For a traditional mortgage, the target number is 20 percent of the sale price for the down payment and another estimated 5 percent toward closing costs. If your dream home is $200,000, expect to need $50,000 saved.

It seems a bit daunting, doesn’t it? The Consumer Financial Protection Bureau reports, “People often put off saving for [important] goals because they feel like they don’t have enough money to save or they are busy struggling to make ends meet today. They feel like they can’t think or worry about saving for goals, large purchases, or even life events in the future. This can create financial challenges in the future.”

So, how do you start saving the tens of thousands of dollars needed for a home purchase? Here are our tips for saving money for a house.

Set a Goal: Decide how much money you need for the house you want, and set a date to achieve this goal. Moreover, ensure your goal is reasonable, It may take you five years to save $50,000.

Create a Plan: Convert your goal into yearly, monthly, and weekly financial targets. A $178.58 weekly goal is easier to achieve than the lump sum of $50,000.

Cut Spending: Reduce spending on as many items or services as you can. Cut back your cable television from the premium package to basic. Reduce your phone from unlimited calling to a fixed number of minutes. Limit the number of times you eat out.

Boost Savings: Take the money you have saved and invest it into a savings account, certificates of deposit, mutual funds, and savings bonds. Banks and credit unions offer financial products that are safe and boost the value of money saved.

Increase Income: Consider taking a part-time job. The added income will help you to save faster, and will help with other unexpected expenses like automobile repairs.

Revise Goals: If the amount you are saving for a home doesn’t make sense, or your life’s circumstances have changed, adjust your goals. Your goals are not etched in stone. Adjust them so they make sense for you and your family.

If you already saved money and plan on purchasing your first home, or just need more information, please contact us.