May 4, 2020
March 9, 2020
March 2, 2020
This channel is all about practical money tips, regardless of whether or not you are in the market for a home. That being said, I get asked a LOT of questions specifically about mortgages. It makes sense- I am a residential loan officer, and have been for almost 20 years! So for this video, instead of my usual money tips, I want to give you some practical tips about what kind of paperwork is required when you apply for a mortgage. Sometimes the process of applying for a mortgage can seem daunting, but if you’re prepared in advance, it’s SO much easier.
So how do you prepare? Simple- start gathering documents! Your Loan Officer is most likely going to ask you for these when you start the process!
Financial Documents to gather:
If you are Self Employed, you’ll want to gather:
Personal Documents to gather:
Obviously every person has circumstances that are personal to them, so in some cases the following documents will be requested:
Miscellaneous Documents in some cases:
Don’t be intimidated!! I know this may seem like a lot, but I promise, it’s not all that bad. And technology is moving faster and faster every day and is making some of this easier for people. There’s a service called “The Work Number” by Equifax that actually allows us to gather a lot of these documents electronically from your employer. Not every employer subscribes to this service, but it’s worth checking with your HR department to see before you go about collecting paperwork!
If you have any questions about this, me and my team are always here to help! We have more info on the loan process, and you can even get a free mortgage quote on our website!!
February 17, 2020
Last year I did a video all about money mindsets that was really popular and got a lot of people thinking about why they think about money the way they do. It got me thinking that it might be helpful to explore this topic even further, and talk about the differences between a “Rich Mentality” and a “Wealthy Mentality”
There are several differences between a rich mentality and a wealthy mentality when it comes to the following topics:
Many people look at earning $100,000.00 as a benchmark for wealth when it comes to income. Then they reach that benchmark, their lifestyle expenses increase, and then that 100k doesn’t seem like so much money. So they aim for the next benchmark… 300 thousand dollars. And guess what? Expenses increase, it doesn’t seem like enough, rinse, repeat. And this just goes on and on.
The above hamster wheel is what having a rich mentality looks like. It relies on earned income strategies, and you can only make as much money as you have time to earn.
A wealthy mentality looks for ways to earn passive income to reach that six-figure goal.
The way a person with a rich mindset looks at savings is quite different than that of one with a wealthy mindset. If you are someone who has a rich mindset, you likely have a large sum of money saved in a bank. I personally have done this myself! I used to be obsessed with the idea of having AT LEAST 6-9 months of living expenses in the bank at all times.
The problem with this is that the money sitting in the bank is not working for you, and is actually losing value due to inflation (I recorded an entire video on this, which you can check out HERE)
Someone with a wealthy mindset will look at that money that would be sitting in the bank and invest it in something that will protect them against inflation, and also bring returns. I get it- the idea of not having your savings readily available in case of emergency is scary. Please understand that I’m not talking about emergency funds, or having some amount of cash handy. BUT, I am talking about investing any large sums you may have sitting in the bank into investments that can work for you!
I know you’ve heard me preach this over and over, but even I am guilty of not really thinking about where every dollar is going. I do when it comes to large purchases, but when it comes to 20 bucks here and there on small inconsequential things I’ll do it without thinking. Guess what those small purchases add up to? You guessed it- Big ones!! The reason this falls into a rich mentality is because I’m fortunate enough to not NEED to worry about spending 20 bucks on lunch out. But if I was coming from a wealthy mindset, I would anyway because every dollar spent on something small is actually a dollar that could be spent on something larger and more meaningful.
Gonna say this loud for the people in the back: GET IN A BIGGER ROOM ????. What I mean by this is: don’t be uncomfortable or feel like you don’t belong if you find yourself in a situation with people who have reached a level of wealth or security that you aspire to. It’s GOOD to surround yourself with people who are reaching the goals you also want to reach. It can be inspiring to hear the successes of others, and it can be helpful to learn from them!!
If ever you want to talk about this, or have more questions, I’m here to help!
February 10, 2020
This has been a hotly debated topic on this Money Tip! I first talked about this last year when talking about “velocity banking”, and it was like lighting a match. If you’re not sure what velocity banking is, you can check out this video for more info.
So, that being said, this week is NOT about velocity banking! This week I’m talking about OTHER methods to chip away at your mortgage in practical ways.
First and foremost, it’s really important to have an understanding of how mortgages work so that you can make choices that help you pay it off in a way that makes sense for you. That means we need to talk about amortization.
Amortization is the process of spreading a loan out into a series of fixed payments. Investopedia defines amortization as:
“…paying off debt over time in regular installments of interest and principal sufficient to repay the loan in full by its maturity date. With mortgage and auto loan payments, a higher percentage of the flat monthly payment goes toward interest early in the loan. With each subsequent payment, a greater percentage of the payment goes toward the loan’s principal.”
Confused? It’s ok! Looking at an amortization schedule might actually help when visualizing how amortization works (Hint:This is why when acquiring a mortgage, working with a professional who can go over a detailed amortization schedule with you is a good idea!)
Yeah, I know this seems like a no-brainer. But some people may not realize that a 30 year fixed mortgage (which is extremely common) isn’t the only option available. You can have 30, 20, 25, 20, etc. There are SO many choices, and it’s a good idea to consider more than one and really think about your long term financial goals when you’re shopping for a mortgage.
For the sake of simplicity, I’ll compare a 30 year mortgage and a 15 year mortgage, both at a 4.5% fixed interest rate, borrowing $200,000.00. The shorter loan term actually saves a ton of money in the long run! Let’s look at the numbers:
30yr Monthly Payment: $1,300.37. Total Interest paid over 30 years: $164,813.42
15yr Monthly Payment: $1,530.99. Total Interest paid over 30 years: $75,397.58
This means that the same exact loan amortized over 15 years instead of 30 saves you $89,414.84
Did your eyes bug out a little bit? Yeah, mine too! Choosing a shorter loan term can save you SO MUCH MONEY. In this example, it’s more than HALF of the money you would have been paying in interest. I don’t know about you, but I love paying 50% less!
Also something to keep in mind, interest rates for shorter terms are usually lower than their long term counterparts. So the moral of this story? Make sure to ask your loan officer to show you more than one option, and if you’re able to make a shorter term mortgage work for you, do it!!
This is by far the easiest and most practical way for someone who already has a mortgage to pay it down faster. Whether it 5, 10, or 100 dollars, putting it towards your mortgage principal makes a difference!!! I swear, every penny counts here. Every time you put extra money towards your mortgage principal, you are making dent!
Did you know that paying an extra ten dollars a month EVERY month knocks off 9-13 months of mortgage payments? That’s huge!! Ten dollars. That’s one lunch out. Or movie ticket. Or cocktail. ONE. If you can manage to put those ten dollars towards your mortgage every month, you just saved yourself almost an entire year of mortgage payments.
Want to really have your mind blown? Paying an extra $100 every month knocks off six to eight years off your mortgage. Read that again: 6-8 YEARS off your mortgage by paying an extra hundred dollars a month!
NOTE** If you’re going to do this, it’s IMPERATIVE that you mark those extra dollars for principal. This strategy only helps pay down your loan if you are putting that extra money towards principal payments. So when you are making that monthly payment, pay attention to the check boxes!!
This is an extremely common strategy. Bi-Weekly payments means that instead of making one mortgage payment every month, you actually make half of your monthly mortgage payment every two weeks. Why does this help? Because by doing this, you actually end up making one extra mortgage payment every year!
You have to be ahead in your mortgage payments to start this, AND you need to make sure that you have the option to implement this with your mortgage company. But if you can, this is an easy way to pay down your mortgage faster!
I bet by now you’re noticing a theme here: The more you pay down your principal, the quicker your mortgage is paid off! It really is that simple.
It all goes back to that initial definition of amortization. Because of that, your monthly payment always remains the same. However, if you are paying extra money towards principal, (either consistently every month, or periodically in large sums) you are reducing the debt owed, and the amount of interest being paid over the life of the loan.
So let’s say you have a large sum of money coming to you- a bonus, commission, inheritance, really awesome birthday present… if you were to put that money towards your mortgage principal, you’re again reducing the amount of money owed, which reduces the amount of time it will take you to pay it back.
Fun fact: If you had a 30 year fixed mortgage, one extra payment a quarter results in an average of ELEVEN years off your mortgage. Obviously this will vary depending on your borrowed amount and rate, but it makes it worth saving up those bonuses and applying them to your mortgage!
I’m a bit conflicted in giving this as advice. I personally think it only makes sense to refinance if you will see a significant monthly savings (more than 200 a month in payments), and/or you can drop private mortgage insurance.
If you can- great! It’s absolutely worth exploring, seeing if you can lower your rate, shorten your term, etc. BUT, it needs to be the right circumstances. Refinancing can cost you money, so you need to make sure that the savings achieved are significant enough to cover whatever cost may be associated with it.
January 27, 2020
So I recently did a bit of research on what the most common difficulties most homeowners face, and I kept coming across the cost of home improvements and repairs.
In fact, I even discovered that 3 out of every 10 homeowners do not have any money set aside for home repairs- but I’m willing to go out on a limb here and say that almost 100% of home owners will someday have to make a repair. And a lot of people want to make improvements, remodel, redecorate, update, you name it!
I’ve been there too, and I thought it would be a good idea to talk about how to make sure those improvements (and inevitable repairs) don’t destroy your budget!
My Top Five Tips to Prevent Home Improvements & Repairs from Breaking the Budget
If you are in the process of purchasing a home, make sure you get a thorough home inspection. And if you have been in your home a long time, and genuinely don’t know where to start, or are concerned that you might be facing some serious issues, you can also order a home inspection! A home inspection simply gives the person requesting it a detailed report on the condition of the home. From windows, to walls, to roofing, plumbing, HVAC, electrical, etc., this report will give you a heads up on what repairs are imminent, and what may be coming down the road in the next couple of years.
Or, if you don’t want to go so far as hiring a home inspector, you can always meet with a handy man or a contractor and come to a similar result. The important thing here is gathering information about your home so you have an idea of what to expect. Knowing this will give you a baseline on how to set up a budget for future repairs.
And a word of caution to people ordering inspections as part of a home purchase: If you’re able to negotiate a lower sale price in exchange for the seller not having to make repairs on the home you’re buying, SAVE THAT MONEY. Those repairs that came up in your report will still need to be made, and the money you saved on the purchase should be set aside for when you need to make that repair.
This can be a great way to save money on common repairs. With a home warranty, you an annual rate for warranty coverage on your home. Depending on the plan, this can include appliances and even some plumbing. For example, when I bought my first home, I had a leak and some water damage from a faulty disposal in the kitchen sink. But I had a home warranty in place! So I called, and simply paid a $25 service fee, rather than the $175 repair that I would have had to pay for. Now, I will say that you need to do your due diligence and make sure you understand what is covered and what is not. It needs to make sense for you, for the age of your appliances, etc. But this can be a big money (and time!) saver.
You can purchase a home warranty yourself, but this is also something you can ask for from the seller when negotiating the purchase of a home. Either way, paying a service fee vs racking up repeated repair costs is a great way to save money.
Did you know that only 10% of people who see physical damage from a home repair actually act on it right away? This is craziness!! If you can see physical damage, that usually means the problem NEEDS to be fixed. If you act quickly, you prevent further damage. If you don’t act quickly, you run the risk of more damage occurring. More damage means more money out of your pocket.
For example, if you see a water leak and think, “oh, it’s just a drip” that drip can turn into a burst pipe, or even worse, something like black mold! Then you get into dealing with insurance… eeek!
At the very least, have someone come look and tell you the extent of whatever the damage may be, and what the chances are of it getting worse. It’s better to suffer a little bit in the short term and get something fix than be in deep water if you let it go too far!
Are you handy? Great!! You’re already a step ahead. And even if you’re not, maybe head to google and see if you can learn how to make small repairs yourself. Often, things that seem really complicated are not too hard, and you can find instructions online for just about anything!
My advice: Look up how to do it yourself before you go shopping for a handyman.
Do research when it comes to professionals, and get multiple quotes! And this is advice that I think applies to just about any large purchase! Especially if you are looking for a specific service. It’s great to educate yourself on the cost of goods and services, and then you can make informed decisions that work with your budget.
Also, don’t be afraid to ask for a better deal! I recorded an entire video about the benefits of asking- make sure to check that out here: https://youtu.be/cE3Ki_MD9xg
January 20, 2020