How to Pay Off a 30-Year Mortgage in 25 Years with Little Effort!


Did you know that paying your mortgage every 4 weeks instead of once a month reduces a 30-year loan by almost 5 YEARS?

Paying your mortgage every month for 1 year = 12 payments.

Paying your mortgage every 28 days for 1 year = 13 payments.

The trick to reducing a 30-year loan down to 25.5 years is finding a painless way to make one additional mortgage payment per year!

Since it might never feel like a good time to make that extra payment, here are 4 different ways to make that one extra payment:

  1. Make one addition mortgage payment anytime during the year.
  2. Double up on your mortgage payment one time during the year.
  3. Pay your mortgage every 28 days instead of once a month.
  4. Set up a Bi-Weekly Payment Plan and make 1/2 payment every 14 days. Some finance institutions offer a bi-weekly payment plan. Simply call the customer service number on your mortgage statement and ask if a bi-weekly payment plan is available to you.

Fun fact: Make two additional mortgage payments per year and reduce a 30-year term to 22.5 years.

It’s hard to argue against paying off any and all debt as soon as possible. I would recommend paying off higher interest rate loans, such as credit card debt, prior to considering making additional mortgage payments. If you have any questions, feel free to email me at [email protected].

 

Free Credit Monitoring – Protect Yourself From Equifax Data Breach 2017!


Credit-reporting company Equifax Inc. said on Thursday, Sep 7, 2017, a security breach within the Equifax credit bureau occurred and could potentially impact 143 million consumers, including anyone that ran their credit report within the last seven years.

The data breach appears to have occurred during the period between mid-May 2017 to early July 2017.

Free Credit Monitoring

In response, Equifax is offering free credit monitoring for all bureaus, to all US consumers.

You can sign up for monitoring by visiting Equifax’s website: https://www.equifaxsecurity2017.com/enroll. This site is intended to inform you if your data was compromised.

“This is clearly a disappointing event for our company, and one that strikes at the heart of who we are and what we do,” Equifax Chief Executive Richard Smith said in prepared remarks. “I apologize to consumers and our business customers for the concern and frustration this causes.”

 

On Friday, shares of Equifax fell 14% to $123.03 in morning trading in New York.

2017 FHA Loan 3.5% Down Payment – The Basics


The Federal Housing Administration offers the infamous FHA loan. FHA loans are primarily known for allowing a low 3.5% down payment on 1-4 unit properties  – even as properties up to a $660,000 purchase price (in Los Angeles and Orange County). FHA loan limits vary per county.

FHA is also known as a first-home buyer program but FHA is not a first-time home buyer program. Lenders tend to market FHA to first-time home buyers because of the low down payment option, which is why people tend to think of it as a first-time home buyer program.

Owner occupied primary residences are allowed. Investment properties and second homes are not allowed.

FHA offers a 30-year fixed rate mortgage and a 5/1 adjustable rate mortgage.

FHA is more lenient on all credit related issues. Lower credit scores are allowed. It is true that FHA allows a minimum 500 credit score but practically speaking it’s rare that someone with a 500 credit score will qualify for a loan. FHA calls for a 3-year waiting period on foreclosures vs. the industry standard 7-year waiting period. Short sales, bankruptcies and loan modifications require a 4-year waiting period on average and FHA requires only 2 years.

Documentation requirements are pretty much the same for all loans including FHA.

One common misconception is that FHA loans take longer to close. This is 100% untrue. I’ve closed FHA loans is less than 20 days! The only reason that rumor exists is so lending institutions and loan officers can blame closing late on something.

Fun fact: FHA allows 3.5% down for a house, condo AND a duplex, triplex and fourplex. http://homeloananswerguy.com/2017/02/14/how-to-buy-a-2-to-4-unit-property-with-only-3-5-down.

Thinking about buying a condo or townhome using an FHA loan? Here’s a problem you might run into: FHA requires the entire condo project to be FHA approved! No FHA project approval. No FHA loan allowed. And most condo project are not FHA approved.

FHA loans tend to be more expensive than conventional loans primary because of the cost of mortgage insurance.

FHA loans require monthly mortgage insurance regardless of how much you put down AND the monthly mortgage insurance payment never goes away. Since 2013 FHA requires monthly mortgage insurance for the life of the loan.

Conventional non-FHA loans require monthly mortgage insurance only when putting less than 20% down AND the mortgage insurance goes away once 20% equity has been reached by either paying down the loan balance or the property goes up in value.

How does one get rid of mortgage insurance? Once 20% equity in the property has been reached one can refinance out of an FHA loan and into a conventional loan.

In addition to monthly mortgage insurance, FHA charges a one-time upfront mortgage insurance fee of 1.75% of the loan amount. This lovely 1.75% fee can be financed into the loan and is not required to be paid out of pocket but you are still paying for it.

I always say that FHA loans are great… unless you qualify for a conventional loan! Conventional loans require only 5% down up to a $445,000 purchase price so make sure to explore all available loan options. But if FHA is the only loan you end up qualify for, it’s not only a great option, it’s your best and only option.

The Impact of Solar Panels on Your Home


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Residential solar is becoming more and more popular with peoples desires for independence from the grid and a greener lifestyle. Local and state governments are still offering incentives to install solar panels. Many new home construction builders include solar panels as an energy saving option. Solar may or may not become a major player in generating cheaper energy – only time will tell. What is the impact of Here are a few things to consider when looking at the property value impact of solar panels.

  1. Government incentives will not last forever.
  2. Solar panels can cost upwards of $20,000 and may be financed.
  3. Selling your property with financed solar panels? Financing agreement can be transferred to the new homebuyer or must be paid in full before or at the time of closing escrow. The best-case scenario is the new homebuyer loves solar panels and is willing to take over the financing agreement. Worse case scenario, the new homebuyer hate solar panels and wants the panels removed entirely before purchasing the property.
  4. What is the life expectancy of a solar panel?
  5. How much are maintenance costs?
  6. How much value do panels add to the value of the property?

Solar has a cool factor in my opinion but the cost is still fairly expensive. The government is betting big on solar panels, hoping solar panel technology will become more effective and cheaper in the future. With Porsche just announcing 50% of its production to be electric by 2023, it would appear our appetite for low-cost electricity is not going anywhere anytime soon.

The Impact of Self-Driving Cars on Real Estate


The future is now. Driverless cars are not only coming soon they are already here! Tesla and Mercedes Benz Car offer some self-driving technology in models for sale right now. The state of California has licensed 27 companies to test driverless vehicles on public roads. Undoubtably, self-driving cars will have an major impact on world as transportation costs will go down significantly by eliminating the cost of the driver. The changes brought to the world by the advent and popularization of self-driving vehicles has begun and will certainly affect the housing and real estate markets. There are still many exciting unknowns.

Here are 3 ways that driver-less cars could change real estate.

1. Ride sharing. One of the predictions that is being made about the widespread adoption of driver-less vehicles is that this will change the way we view vehicle ownership. Instead of owning one (or several) cars, many people will opt to instead purchase miles on an autonomous vehicle, which can pick them up and drive them wherever they wish to go. This could lead to our housing changing to be less accommodating of vehicle ownership. Owners may forego garages or even driveways, as they find other uses for their square footage.

2. Parking. Large parking garages may vanish on day. Parking lots are often times situated on some very expensive real estate. Particularly in big cities, parking lots could become obsolete faster than we think as more and more people are being dropped off by vehicles. Developers will put in other structures on the spaces previously occupied by parking structures.

3. Fuel. Gasoline is still king but as these newer cars are adopted, what will they run on? Will they be electric? If the vehicle population of the country undergoes a massive shift from gasoline to electric or something else, the countries gas stations as we know it might become obsolete. What will happen with that real estate?

Garages will become a thing of that vast once the vast majority of people stop owning cars. No more giant parking lots at the mall. No more underground parking lots in office buildings. In our lifetime, we might experience younger generations not knowing what a garage is. Owning a car might become a rare luxury like owning a horse.

The Benefits of a Reverse Mortgage


Reverse Mortgages are financial arrangements that allow you to live off of their equity in your house. While these are not recommended for people who have enough to live comfortably or who have little or no equity in their house, it can be hugely helpful to others. In a perfect world, everyone would be able to retire and live comfortably during their golden years. However, we see more and more seniors who end up having to work longer, or drastically reduce their standard of living. A retirement should be able to provide for you to live under the same standard of living you enjoyed during your working years. If you have a moderate amount of equity in your house, you can take advantage of it and live out your years in comfort with a reverse mortgage.

So what should you know about a reverse mortgage? Most reverse mortgages are obtained with refinancing ones home but one can obtain a reverse mortgage as a purchase-loan as well. A reverse mortgage has no monthly payments and can allow one to access cash out of the property. However, you will have to pay normal taxes, utilities, and other home maintenance bills. No monthly payments sound great but make no mistake, you’re still paying for it. A reverse mortgage can mean you are essentially handing over the property to the bank in exchange for not making a monthly mortgage payment.

A friend of mine’s mom used a reverse mortgage 15 years ago to access her equity to pull out $200k in cash with NO no monthly mortgage payment requirements for the rest of her life. Her property was paid off at that time. Today, that $200k mortgage and increased to $420k – due to negative amortization. The property is worth $695k. The loan balance will continue to increase and could eventually exceed the value of the property, depending on how long she lives. For her, a reverse mortgage was the right decision but again, this loan product is not for everyone. 

A common misconception is that the reserve mortgage lien holder owns the property and keeps any equity remaining. This is untrue.

No loan is good or bad. A loan is just a finance-tool. Make sure this tool is right for you. Always spend more time researching the negative aspects to any loan since the positives are most obvious. Please consult a tax advisor for further information and talk to friends and family. Make sure to do your homework before agreeing to any mortgage and especially a reverse mortgage.