26 Mar 2020
By Kevin Gahagan

Home Improvement Projects For The Quarantined

Mortgage

Home Improvement Projects For The QuarantinedIf you have paid attention to the news recently, you have probably heard about the coronavirus pandemic which also goes by the name COVID-19. Those who are exposed to the virus might be asked to place themselves in quarantine. Some states have even told their residents to shelter in place. While this infection has forced everyone to change the way they live their lives, there are still some home improvement projects you can tackle during quarantine to put your free time to use.

Jump On Spring Cleaning

One of the first home improvement projects people need to tackle is spring cleaning. Spring is right around the corner so it is time to sort through items that aren’t needed anymore. Start with the wardrobe closet and figure out what is going to be worn during the warmer months, what can be put into storage, and what can be donated. Then, move to the kitchen. Take a look at the drawers and see if there is anything that can be put away. Try to pull out the separators can clean the drawers as well. Finally, move to the living room and declutter anything that isn’t needed anymore. This is going to make the home feel more open, which is important during quarantine.

Repurpose A Room In The Home For A Gym

If you or your family are going to miss going to the gym, it is time to repurpose a room to act as an indoor space to exercise. Think about using the bonus room or basement as an athletic area. Furthermore, you can even save money on gym costs. Try to move chairs and coffee tables out of the way. If possible, put down some rubber flooring, an old mat, or even a few towels to prevent from staining the rug. If you are going to use a jump rope, make sure that nothing valuable is in the way. Try to shift items to make plenty of space for push-ups, sit-ups, jump rope, and free weights.

Home Improvement During Quarantine

It is important for people to follow the advice of medical professionals during the pandemic. Being quarantined is not an ideal situation, but these are only a few of many home improvement projects that can be accomplished during your time at home. 

24 Mar 2020
By Kevin Gahagan

Home Sales Are Spiking, Driven By Low Mortgage Rates

Mortgage

Home Sales Are Spiking, Driven By Low Mortgage RatesAccording to data from the National Association of Realtors, existing-home sales increased by 3.6% in December 2019. That pace is the strongest month-over-month in almost two years, since February 2018. The sales figures were also up 10.8% from what they were in December 2018.

What’s behind this uptick? The biggest factor driving the surge in home sales is historically low mortgage interest rates. 

Plummeting Rates

During the last week of February 2020, mortgage rates fell to their lowest in three years and were hovering – just barely – above all-time lows. The 30-year fixed-rate mortgage was sitting at 3.45%, almost exactly one percentage point below the same week in 2019. Its lowest rate ever, 3.31%, was reached in November 2012 immediately following the recession.

Despite widespread uneasiness about the falling rates, this should come as no surprise. Mortgage rates typically follow the 10-year Treasury yield, and it’s been extremely volatile recently due to investor concerns over the coronavirus outbreak.

Consumers are clamoring to take advantage of these low rates, particularly first-time homebuyers. New mortgage loan applications increased over 30% in December 2019 as compared to December 2018, while applications for refinancing rose a stunning 109%. 

Demand Is Outpacing Supply

Interestingly, this considerable spike in home sales comes at the same time as a national jump in median sales prices. January 2020’s median listing price was $299,995, a 3.4% year-over-year increase, and many large metropolitan markets saw increases of more than 10%.

With eager consumers applying for new mortgage loans at a dizzying pace, the supply of available homes simply can’t keep up. The number of previously-owned homes on the market decreased by 13.6% in January 2020 as compared to the year before, with some large cities experiencing decreases of over 14%. This is a classic case of supply and demand, and the current market is strongly favoring sellers.  

Looking Ahead

These upward home sales trends are predicted to continue throughout much of 2020, thanks to the “perfect storm” of incredibly low mortgage loan rates, a decreased supply of available homes, and an unemployment rate that’s settled into a 50-year low. 

If you’re in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional.

20 Mar 2020
By Kevin Gahagan

Paying Rent And Mortgages With A Credit Card

Mortgage

Using a credit card for mortgage or rent

When people purchase a house, they usually set up their mortgage payments as a direct draft out of a checking account. The same is typically true of rent payments; however, many people have wondered if there was another way to pay rent or mortgage. After all, there are credit cards out there that have fantastic rewards. It would be great to take advantage of these rewards by placing rent and mortgage payments on a card.

Sadly, there is no way to pay rent or mortgage with a credit card without a fee. There are bank interchange fees that would lead to a surcharge for banks and landlords. This prevents them from readily accepting credit cards without a fee. What if there was a better way?

Possibilities For Credit Card Payments

It is rare to find an apartment complex that accepts a credit card. It is even harder to find a bank that does this. It is helpful to ask about the different ways to pay rents and mortgages when talking to banks and landlords. It can be helpful to do the math on any fees that are charged and compare them to rewards. For example, if a credit card gives five percent cash back on rotating categories, it might be beneficial to take advantage of this five percent back and pay a two percent fee to use the card. This would still net three percent in savings.

Using Third-Party Payment Options

There are also third-party service providers that will allow someone to pay nearly any bill online with a debit or credit card. This includes rent and mortgage payments. These third-party sites still charge fees. Sometimes, it is a flat rate. Other times, it is a percentage of the total.

When To Use Credit And Debit Cards

The most appropriate time to use a credit or debit card to pay this bill is when a minimum spending requirement is needed to trigger a significant bonus. For example, if a card requires someone to spend $5,000 to trigger a bonus, it is easier to reach this number by using the card to pay rent. Otherwise, it is better to calculate the fee versus and points and see which option makes the most sense.

19 Mar 2020
By Kevin Gahagan

More Than 25% Of Millennial Homebuyers May Be Financially Unprepared

Mortgage

More Than 25% Of Millennial Homebuyers May Be Financially UnpreparedMillennials are the first generation in America that will probably not be able to do as well as their parents. In the United States, there is not as much upward mobility as there was in the past. What is the cause of this?

CNN reports that Millennials have more college degrees than their parents. They also have an enormous amount of student loan debt. Many millennials have lower-paying jobs than their parents had at the same age when adjusted for inflation. Spending patterns changed as well, due to the high cost of living.

Finding The Money

Saving is not easy. The net worth of Americans, who are from 18 to 35 years old, decreased by 34% since 1996. Even though millennials are financially savvy, the 2008 global financial crisis made it difficult to find jobs and made saving for many nearly impossible. Those who have been able to put aside some money in the last ten years are lucky if they have $8,000 in savings, which is the average for those millennials trying to save for a home purchase.

Soaring Home Prices

By 2018, the real estate market recovered from the 2008 collapse. In most American cities, housing prices are going up significantly. The home prices surpassed pre-crash levels and now continue to rise. Soaring home prices make buying a home very challenging.

What To Do?

For most millennials, the best choice is to continue to live with their parents and use the lower cost of living as an opportunity to put away enough money for the required down payment to buy a house. Many plan to live very frugally and to save for up to five years if they want to buy a home of their own.

For others, they are developing co-ownership plans, where millennials plan to share home buying with more than one person. In these deals, they become the landlord and the tenants of a multifamily property that they buy together.

The Math

The median home price in America is $226,800. First-time buyers, who qualify, can get FHA-backed mortgage financing with as little as 3.5% down. Still, that is $7,938 just for the down payment. There is also the need to have 2% to 5% of the loan amount for closing costs, which can add up to $10,943.

Financial prudence recommends having at least three months of living expenses in savings to cover any unexpected temporary emergencies, like losing a job. Add another $12,000 for this contingency. This means to safely buy a home at the median price, with a low-down-payment loan, a millennial may need to have as much as $30,881.

For conventional financing, with 20% down, the numbers are much higher. For that type of financing, a millennial needs about $66,432!

Summary

Millennials face significant challenges in homeownership that are unique to their generation. For these reasons, many are delaying homeownership for at least five years and living with their parents longer, to save more money, to make their dream of homeownership come true in the more distant future.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional.

12 Mar 2020
By Kevin Gahagan

The Long-Term Toll Of College Costs

Mortgage

The Long-Term Toll Of College CostsTaking out enormous student loans to get a college degree may be a terrible idea for some. The burden of paying off this debt can make it far more challenging to do other important things like buying a home.

Here are some common problems that come from taking out large student loans:

  • Not Worth It: The college degree may not help you land a high-paying job. Even high-paying jobs like being a dentist have extremely high educational costs as well. Aspiring dentists borrow, on average, over $500,000 to go to dental school and spend multiple decades paying it back.
  • Tuition Hyper-Inflation: Colleges and universities saw the easy money from student loans as a great reason to increase tuition. In many institutions, tuition increases, over the past 42 years, went out of control, especially for trade schools and private universities. College costs rose by 1,400% since 1978. That is five times more than the inflation rate over the same period.
  • Over–Borrowing: The easy ability that students have in many cases to over-borrow for living expenses on top of college costs means that they take bigger loans than they need and wastefully spend the money.

In the olden days, they had a phrase for a person who sold themselves into a kind of work-slavery. They called these people “indentured servants.” By taking out student loan debt that may take decades to pay back, this is a form of indentured servitude, especially because it is difficult, if not impossible to get out of paying the student loans back. Even bankruptcy does not discharge student loan debt.

If your student loan goes into default, there is the possibility of a wage garnishment, which means up to 25% of your take-home pay will be deducted from your checks and used to pay off the student loan debt. This is like a modern version of being an indentured servant.

But You Need A College Degree To Succeed, Right?

For many, earning a college degree that teaches skills and knowledge, which help get a high-paying job, is a reasonable idea. However, not all degrees are equal in their influence over getting a job. Many degree certificates are not worth the paper they are printed on. Moreover, some do better than those who have degrees.

Conclusion

What do Bill Gates, Coco Chanel, Ralph Lauren, Rachel Ray, Mark Zuckerberg, Sean “Diddy” Combs, James Cameron, Steve Jobs, Steve Wozniak, Richard Branson, Simon Cowell, Larry Ellison, Ted Turner, and Wolfgang Puck all have in common? They all do NOT have a college degree and still became immensely successful. Many are billionaires, who simply started their businesses and did not have time to finish college, so they dropped out.

Before you saddle yourself with student debt for a huge portion of the rest of your life, think carefully about the ramifications. Then, if you must borrow, borrow as little as possible and make sure you get a degree that helps get a high-paying job.

If you are in the market for a new home or interested in refinancing your current property, be sure to consult with your trusted home mortgage professional.