Finances, Finances, Finances

3 Financial Problems We All Face

Handling money is a challenge for everyone. Whether we admit it or not, making money and saving it is a hard thing to do. Most Americans live the paycheck to paycheck cycle, only having enough money to last them until they get paid again. In this article, we’ll recognize a few of the most common money mistakes that we all make and how to prevent them.

Living the Check to Check Cycle

Living check to check means that you can only afford to pay the bills that you have. In other words, you have no flex room to do anything else. Having overflow money is important, especially for people whose money is depleted once all of their bills are paid. One way to get out of the check to check cycle is by cutting out unnecessary expenses. What bills are you paying that you don’t have to pay? Maybe you pay for a streaming service like Netflix or Hulu or maybe you have a sweet tooth and you add a lot of extra sweets to your grocery basket. You’ve got to develop a method to saving your overflow, and if you don’t have any overflow to save, you’ve got to cut some bills out.

Biting off More than We Can Chew

The result of taking on too many bills is being overwhelmed with debt. Most people handle this by paying off expenses with credit cards because they don’t have enough cash to afford it. What most do not realize is that by using credit cards to pay for things you can’t afford, you’re only building up your debt. If you couldn’t afford to pay the cost of what you wanted in the first place, chances are you won’t be able to pay it off once it’s on a credit card. The trouble with credit cards is that we keep building and building the debt, while only making minimum payments. To combat over spending, set a budget for yourself. Come up with a realistic budget, placing your net salary at the top and your bills for the month underneath. Do the math and see how much money you have left over after paying JUST BILLS. The remainder of your money should be split, half to go towards savings, and half to go towards checking. A good practice that I’ve put into play is this- If you can’t buy it three times, you can’t afford it. Apartments sort of use this method when renting to tenants, hence the reason they require your salary to be 3 times the rent. Another rule of thumb is that if you can’t buy it in cash, don’t buy it. This is a great practice to use if you’re trying to wean yourself off of your dependency on credit cards.

Not Thinking of the Future

We’ve all been there, we’re driving along the road listening to our favorite rap song when all of a sudden you see your tire pressure light come one. In most cases, we just need a little air, but some of us have pulled over and found that we need a new tire completely. So you live check to check and there’s no money in your bank account and you’ve bitten off more than you can chew in expenses and your credit cards are maxed out. What now? Should you take on more debt and go to your nearest pay day loan facility? Should you shame yourself and ask your parents for money…again? We put ourselves in tight spots like that when we don’t plan for the future. It’s hard to plan for things that you don’t know are coming, but that’s exactly why it behooves us to plan ahead. We all need an emergency fund, a little nest egg that is specifically on reserve for hard times. It seems trivial sometimes to put away money and never touch it, and hopefully you’ll never have too, but your future self that’s in a jam will LOVE you for it. It’s the same concept as insurance, except it’s not in bill form. Think about it: you pay your car insurance bill every month with the hope that you never actually need it. But if you do need it, you’re definitely happy that you have it. Well, you should pay yourself a little “insurance” money every month and put it in an emergency account. That way (though we only wish luck and prosperity for you), if you ever need to get yourself out of jam, you can.

Adulting (my verb for being an adult) isn’t always easy and it’s surely not always fun. At times we have to sacrifice buying those new shoes or going out to paint the town for the weekend. If we want to be in good financial standing, budgeting is key. Plan out the bills that must be paid, cut out the bills that you don’t need and always save up for a rainy day, because as the saying goes “When it rains, it pours!”. Paying your bills and paying yourself is important and almost mandatory for keeping your head above the financial waters. Stay afloat ladies and gentlemen!

 

When doing your research always be sure to consult great sources. Check out the sources for this article below!

https://www.thebalance.com/dealing-with-financial-stress-2385957

https://www.thebalance.com/steps-to-start-thriving-financially-2385531

https://www.thebalance.com/six-bad-money-mindsets-you-need-to-break-454030

 

 

WHITNEY RUSH, VALLEY WEST MORTGAGE

Super Moms

If you’re a single mom considering buying a home, you’re not alone. According to a study conducted by the National Association of Realtors, single women are more than twice as likely to purchase a home than single men. In late 2016, 16% of homebuyers consisted of single moms. Only 7% of buyers were single men.

Surprisingly on a national average, women generally make less money than men. Regardless, single moms everywhere are finding opportunities to purchase homes for themselves and their families.

If you’re a single mom who’s looking to purchase within the year, ask yourself a few questions:

Remember to stay organized during your home buying process. Be prepared to provide tax returns, proof of income, renter’s history, proof of identity and anything else your chosen lender may ask for. There’s a whole slew of paperwork that comes with purchasing a new home.

Another thing to think about is that if you’re buying your first home, it probably won’t be your last. Most people go through two or three permanent residences before finally settling down into a home that they will never part with. Families grow, new jobs require relocation, and sometimes you just need a change of scenery. So don’t be disappointed if your first home doesn’t hit every nail on your wish list, dream homes often take several years to come by.

Safety is another key issue. If you’re a single mom and you’re not actively dating, chances are there may not be a man around for added security. You could consider getting a dog as a first line of defense and an alarm system that you could connect to your phone as a second.

Single moms are the lifeblood of this country, they always seem to beat the odds and supersede what seems like impossible expectations! Do you want a new home for you and your family? Go get one, you Supermom!

 

When doing your research always be sure to use great sources! Check out the sources for this article below!

http://themortgagereports.com/24375/single-women-homebuyers-your-guide-to-getting-it-right

http://themortgagereports.com/26637/five-keys-to-a-better-mortgage-application

 

 

WHITNEY RUSH , VALLEY WEST MORTGAGE

 

More Pros with the Rate Hikes

Our last few articles have been on the impact that the oncoming rise in interest rates from the Federal Reserve will have on the general public, and more specifically how it will impact those who are in the market for purchasing and refinancing. Janet Yellen has openly stated that a change from the Fed is coming soon due to the growth in our economy. We’ve mentioned both the pros and the cons of an interest rate hike, but lately we’ve been noticing more pros for our borrowers than cons.

One positive impact that this rise in interest rates can have on our current and potential borrowers is the opportunity to free themselves from Mortgage Insurance Premiums. Your Mortgage Insurance Premium is the price that you pay monthly as a part of your mortgage payment that goes into an account to protect your lender if you fall on hard times and happen to default on your loan. A Mortgage Insurance Premium or MIP for short, is usually only required for borrowers who can’t afford to put down 20% of their loan amount when applying for their mortgage loan. Up until January 2013, borrowers were able to cancel their MIP coverage once they had made enough payments and had 20% equity in their home. Now that policies have changed, borrowers no longer have the option of cancelling the MIP on their loan when they reach 20% equity.

However, being the mortgage monsters that we are here at Valley West Mortgage, we’ve recognized a way that borrowers can still break away from the bondage of MIP. With a refinance into a Conventional loan where the requirements are somewhat different than an FHA loan, borrowers can drop their MIP payment (provided they meet the aforementioned requirements).

Borrowers who used the FHA program to purchase their home who have been making regular mortgage payments have been building up equity since the day they made the first payment. Couple that with the fact that the average prices of homes around the United States has gone up in the last 2-3 years and just like that, we’ve found another reason for you to refinance into a Conventional loan. Having equity or monetary value in your home means that you can apply for a Cash-Out refinance. Thinking of going on a vacation? Have a kid going to college? Or maybe you just want to do some home improvement? A Cash Out Refinance would give you the opportunity to refinance your old loan into a new one and get cash back for some of the value that your home holds.

In 2016 about 8% of all the refinances processed were for borrowers who were switching from an FHA loan program to a Conventional loan program. That calculates to about 20,000 of those refinances per month in 2016. With the growth of our economy, it is estimated that the prices of homes will go up by about 5% (according to data found by CoreLogic). Considering the fact that over 2 million borrowers purchased homes using the FHA program in recent years, there is no doubt going to be a large wave of refinances coming from borrowers who wish to refinance in 2017.

 

 

 

 

 

When doing your research, always use great sources! Check out the sources for this article below.

http://www.corelogic.com/blog/authors/sam-khater/2017/03/fha-to-conventional-refinancing-is-a-bright-spot-in-the-mortgage-market.aspx#.WMLlk2_yu72

http://themortgagereports.com/16451/refinance-fha-mortgage-rates-streamline-refinance

 

WHITNEY RUSH, VALLEY WEST MORTGAGE

Inflation and Our Economy

How Inflation Impacts our Economy

Our economy is doing better than it has done in a long time. As more and more people in the US are finding work, the unemployment rate is steadily dropping. This is great for the economy of our country as people and businesses are buying, selling, and trading and in turn stimulating the economy.

One important factor involving economic stimulation is inflation. Inflation is important to understand if you want to realize why interest rates may be going up soon. Inflation, simply put, occurs when prices for goods and services increase, but the value of the dollar decreases. Inflation is controlled by making sure that the costs of goods and services are proportionate to the amount of money that people are making. It also controlled by making sure that the physical amount of money that the  Federal Reserve is printing isn’t being over produced.

The downside to a thriving economy, is that the same factor that makes the economy thrive is the same factor that can take it down. If more money is being earned by the public, more money is being printed which makes the value of the dollar go down and the cost of living go up.

Let’s illustrate with an example about name brand sneakers. The reason why sneakers are so expensive is because in a lot of cases, the manufacturer only makes so many pair (or in our case, the Federal Reserve only prints so many dollar bills). When people start making more money, they can buy more sneakers. If more and more of the same sneaker is made, the value of that sneaker goes down, because the amount of sneakers being produced has gone up. So, to recreate the exclusivity, the manufacturer increases the price of the sneaker. This brings back the value of the sneaker and ensures that the manufacturer is still making a profit.

By the same token, when we as citizens make more money, the Federal Reserve has to print more money to ensure everyone gets paid, but the faster the Federal Reserve prints money the faster the dollar loses its value. When the dollar loses its value, manufacturers have to raise the cost of goods and services to still make a decent profit. This is an example of inflation, and to counter it, the Federal Reserve increases things like interest rates and taxes.

By increasing interest rates, the Federal reserve is basically making us spend more money on things that are vital to everyday life (mortgage loans, auto loans, credit card loans) to control the amount of money that is circulating within the nation. When rates are increased some people are cut out of the market meaning the spending of the nation as a whole is slowed. In some circumstances (like the one our economy is in now) the Fed has to up the interest rates in order to control spending. Unemployment rates are dropping which means more money is being circulated. This is good for a little while, but if we start making too much money and too much money is printed, we lose the value of our dollar.

Janet Yellen of the Federal Reserve has been discussing interest rate hikes openly in the first couple of months of this year. The Fed can almost guarantee a rate hike and it’s definitely coming soon, as we know the next meeting of the Federal Reserve will be held mid-March. Though a surge in interest rates may make borrowing more difficult (but not impossible) for some borrowers, the idea is that it will help the economy as a whole by controlling inflation.

 

 

 

 

 

 

When doing your research, always use great sources! Check out the sources for this article below.

http://inflationdata.com/Inflation/Inflation_Rate/CurrentInflation.asp

https://www.thebalance.com/what-is-being-done-to-control-inflation-3306095

http://www.investopedia.com/articles/06/gdpinflation.asp

 

 

WHITNEY RUSH, VALLEY WEST MORTGAGE

Mortgage Rate Hikes Are On Its Way

If you’re into literature, you know that shortly before his death Julius Caesar was told to “Beware the Ides of March”, and if there were any soothsayers around today, they’d probably be telling us the same thing right about now in relation to mortgage rates. We’re just slightly over a week into this month and though we’ve yet to see that increase in interest rates that has been so heavily discussed by the federal reserve since the beginning of this year, we still know that it’s on its way. And unlike the great Julius Caesar, we need to be prepared for what’s to come.

Janet Yellen, Chairwoman of the Board of Governors for the Federal Reserve, has hinted to a rise in interest rates, specifically in March, several times this year. Our economy has been doing very well in the sense that more people are becoming employed, making money and paying bills. To balance this surge in economic profit, the Federal Reserve has to ensure that the general population doesn’t make so much money that the value of the dollar decreases. Preventing this kind of inflation means raising interest rates to offset the amount of money that will be circulating throughout the country.

Take a look at Janet Yellen’s comment from the Federal Reserve Meeting on March 3:

"Indeed, at our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate," she added.

Not only did Yellen tell us that the Fed is to have another meeting regarding this issue this month, she also told us what they plan to evaluate. Like we discussed earlier, if the employment and inflation rates are moving in a positive direction (which they have been for the last few fiscal periods), interest rates will rise (according to the Fed).

For banks, rising interest rates will be a benefit for the next coming months as borrowers will want to purchase and refinance before the rates get too high. In other words, business will be booming as the rates rise to their peaks. For borrowers, getting into the bank to purchase or refinance should be a top priority for obvious reasons. To illustrate, let’s talk about my friend Jeff. Jeff is at home watching the news and he sees that gas will cost twenty more cents per gallon starting tomorrow. Jeff gets up from his couch and goes tonight to put gas in his car and he fills up his tank. Why? Well wouldn’t you want to buy gas today if you knew it would cost more tomorrow? Most borrowers have the same mindset as Jeff when it comes to their homes. If they know it will cost them more to purchase a home in two weeks, they jump on the bandwagon and call one of our Loan Officers today to get the process started and to get a good rate locked down. Needless to say, it’s more advantageous for you as a borrower to capitalize from the opportunity. The rates are going up sooner rather than later and hey, if you can’t beat them, join them. If the Fed is going to capitalize from the growing state of our economy, why shouldn’t you?

So heed the warning of the soothsayer and beware, (or in a less Shakespearian language) just be alert of the ides (usually the middle of the month) of March as it may hold the key to your next refinance or purchase and you don’t want to miss that opportunity.

 

 

 

 

 

 

 

When doing your research, always use great sources! Check out the sources for this article below.

 

http://www.cnbc.com/2017/03/03/janet-yellen-puts-a-rate-hike-on-the-table-for-this-month.html

http://www.cnbc.com/2017/03/07/fed-rate-hikes-may-come-faster-than-the-market-thinks-commentary.html

http://www.cnbc.com/2017/03/06/fed-interest-rate-hike-in-march-is-big-deal.html

 

WHITNEY RUSH, VALLEY WEST MORTGAGE

More News on the Rate Hikes

The big question in the mortgage industry is when the rates are going to go up. There’s been talks about it being in March which may be the truth. The Federal reserve is looking to raise its benchmark interest rate this month as long as the economic data remains strong.

The Federal Reserve has hinted March 14-15 will be the meeting that could bring a rate hike. Rate hikes are likely to rise faster this year as the economy appears to be growing with few hurdles and the risks have receded substantially. We will soon see what impact this will have on the industry.

 

 

 

 

Resources:

http://www.mpamag.com/news/yellen-hints-at-timing-of-next-rate-hike-61910.aspx

Interest Rates Are On The Rise!

The Federal Reserve is expecting to raise interest rates as soon as March of this year.

The new Presidential Administration team occupying the White House is expecting a continued growth in the US Economy that has previously flourished as a result of the Obama Administration. They expect that our new President will invoke more jobs, and theoretically as a result of more people being employed, more money will be made for people and for businesses.

More money being made, results in more money being spent. This cyclical regime of the flow of money is what (in theory) will create a thriving economy where everyone earns and everyone spends. When people have the money to pay back and pay off their large debts like credit card, home, auto, and student loans, the Federal Government can decrease their debt.

The problem with the Federal Reserve wanting to decrease their debt is that they gather money for the debt by hiking up interest rates because they assume that if we make more money we can pay more in interest. This means that the percentage that you pay back to the bank every month for your existing home loan and the cost for you to borrow money for the purchase of a new home, goes up. Sure, ideally we’ll all be making more money, but if the Fed is forcing you to also spend more money, how much of this new increase in income will you really see?

With the Federal Reserve strongly indicating interest rate hikes soon, those of you who are interested in refinancing or purchasing in the near future should definitely commit sooner rather than later. When interest rates go up, not even the Federal Reserve knows when it might come back down, as the Fed has noted their concern about the ambiguity of fiscal policies coming from the new Presidential Administration. In fact, the Federal Reserve is predicting the possibility of up to three rate hikes this year alone. That being said, there is likely only a small margin of time for you to take advantage of financially tolerable interest rates. If you haven’t yet done your application for refinance or talked to one of our Loan Officers about purchasing your new home, it’s time to get started!

 

 

 

 

 

 

When doing your research, always use great sources! Check out the sources for this article below.

 

https://fortune.com/2017/02/22/federal-reserve-interest-rate-increase-fairly-soon/

https://www.bloomberg.com/news/articles/2017-02-22/many-fed-officials-see-rate-hike-fairly-soon-minutes-show

https://www.latimes.com/business/la-fi-federal-reserve-minutes-20170222-story.html

 

WHITNEY RUSH, VALLEY WEST MORTGAGE

 

The Consumer Financial Protection Bureau (CFPB) is in back in the spotlight

The Consumer Financial Protection Bureau (CFPB) is in back in the spotlight

The Consumer Finance Protection Bureau (CFPB) has been in the spotlight lately since the scandal that took place a few years ago, got them in water for collecting reams of consumer data, undercutting privacy rights while putting potentially sensitive personal information at risk in the event of a hack, and has been in the sight of congress since its inception for spending a lot of our taxpayer’s money on high salaries to major overhauls at its headquarters.
This time we have the Republicans after them. Republican Ted Cruz and Republican John Ratcliffe have introduced bills in the Senate and House that would potentially dismantle and abolish the agency. Cruz said the CFPB does consumers more harm than good. Ratcliffe, “President Trump has made it clear he’ll join us in our fight to dismantle Dodd-Frank and finally offer some relief to the small business owners throughout Texas and across the country who’ve been hit hardest by its devastating impact.”

When doing your research, always use great sources! Check out the sources for this article below.
http://www.mpamag.com/news/ted-cruz-backs-bill-to-kill-cfpb-60203.aspx
http://reason.com/archives/2017/02/15/the-consumer-financial-protection-bureau

- VALLEY WEST MORTGAGE

2016 Maximum Conforming Loan Limits Established for Fannie Mae and Freddie Mac

Valley West Mortgage is licensed in California, Colorado, Idaho, Maryland, Nevada, New Mexico, Oregon, Utah, Virgina, and Washington.

2016 Maximum Conforming Loan Limits Established for Fannie Mae and Freddie Mac
National Baseline Loan Limit Remains Unchanged; Limits Rise for 39 High-Cost Areas

The Federal Housing Finance Agency (FHFA) today announced that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2016 will remain at existing levels, except in 39 high-cost counties where they will increase. In most of the country, the loan limit will remain at $417,000 for one-unit properties.

The Housing and Economic Recovery Act of 2008 (HERA) established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels. The $417,000 loan limit will stay the same for 2016 because FHFA has determined that the average U.S. home value in the third quarter of this year remained below its level in the third quarter of 2007.

The state of Colorado will see the highest increase. In 2015, the Maximum Conforming Loan Limit was $424,350. In 2016, the Maximum Conforming Loan Limit will increase to $458,850. The increase is a grand total of $34,500.

HERA provides for higher loan limits in high-cost counties by setting loan limits as a function of area median home value. Although the baseline loan limit will be unchanged in most of the country, 39 specific high-cost counties in which home values increased over the last year will see the maximum conforming loan limit for 2016 adjusted upward. Although other counties also experienced home value increases in 2015, after other elements of the HERA formula—such as the statutory ceiling and floor on limits—were accounted for, these local-area limits were left unchanged.

A list of the 2016 maximum conforming loan limits for all counties and county-equivalent areas in the country may be found here. A description of the methodology used for determining the maximum loan limits can be found in the attached addendum.

Addendum: Calculation of 2016 Maximum Conforming Loan Limits Under HERA

CONFORMING LOAN LIMITS

Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit.” Loans above this limit are known as jumbo loans.

The national conforming loan limit for mortgages that finance single-family one-unit properties increased from $33,000 in the early 1970s to $417,000 for 2006-2008, with limits 50 percent higher for four statutorily-designated high cost areas: Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Since 2008, various legislative acts increased the loan limits in certain high-cost areas in the United States. While some of the legislative initiatives established temporary limits for loans originated in select time periods, a permanent formula was established under the Housing and Economic Recovery Act of 2008 (HERA). The 2016 loan limits have been set under the HERA formula.

FHA Lowers Cost of Mortgage Insurance Premiums, Possibly.

President Barack Obama announced on Wednesday that the Federal Housing Administration (FHA) annual insurance premiums will lower to 0.85 from 1.35, according to an article published by CNBC. This move is said to expand responsible credit borrowing to qualified lenders, according to the article, and is an effort to bring more first-time home buyers into the current market.

Mortgage issuers stocks also fell on Wednesday, according to the report, while home builder’s stocks across the nation rose. Julian Castro, Secretary of the U.S. Department of Housing and Home Development, believes that this move will increase the affordability of American homes over the next few years. He said that taking the premiums down for American citizens will improve opportunities and strengthen financial outcomes. He sees this as a step to reduce risks in the mortgage department and help protect consumers.

According to the article, the reduction in premiums could mean a savings of around $80 a month for a first time applicant to the FHA. In addition, Freddie Mac and Fannie Mae (two federally sponsored second-party mortgagers) announced recently a new 3 percent down payment option requiring private mortgage insurance. This, of course, is for qualified lenders, meaning those in very good credit standing. However, it does compete directly with the FHA, which offers down payment options at a 3.5 percent minimum.

The FHA has been working on building its capital reserves back up, according to the article, and because it is not in the clear yet, some people believe that the decision to make cuts could receive some criticism. To be out of the black, its capital reserves must meet a 2 percent minimum.

“Lowering the premium will bring volume back to the FHA,” said Diana Olick, real estate reporter for CNBC. “But it will also bring back risk.”

Among all the risks, the article reports that the White House administration is clearly looking for ways to increase homeownership by making the process and implementation of a mortgage less reckless for buyers. President Obama is expected to address all this and more on Thursday in Phoenix, where he will give a speech on the improvements in the housing market as well as future plans.

Read the full CNBC Article

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