When I first heard of the home buyer tax credit extension in November, 2009, I thought it continued to define the term “stimulus”. I believed at the time, and still do today, that the stimulus was necessary to continue to offer incentives to a housing market in need of any support possible. The tax credit did exactly what it was designed to do, and has even been voted to be extended to allow borrowers to maximize its effect due to mortgage company delays in processing loan files by 6/30/10.
As I shared in my 6/25 post, many economic forecasts were predicting rising interest rates around the time of the tax credit sunset. That surprised and concerned me more than anything. How could an economy grow or expand in any positive way with high/ rising unemployment numbers, rising consumer debt, housing inventory surplus, etc… if rates are increased? Quite simply, rising interest rates would have undermined any momentum the markets had gained and would have pushed it backwards. Housing is 20% of the GDP and is vital to lead any sustainable recovery. Studies have shown $63,000 is put into the local economy with every home sale. How could that be compromised? Why would it be compromised?
To further illustrate my beliefs why interest rates would not increase at the tax credit expiration, the S&P/Case Shiller home price indexes show today that U.S. single-family home prices climbed in April from March, driven by a final sales push before tax credits expired, but signs of a sustained recovery have yet to emerge. "Inventory data and foreclosure activity have not shown any signs of improvement," says David Blitzer, chairman of S&P index committee, which publishes the price indexes. "Consistent and sustained boosts to economic growth from housing may have to wait to next year." With the expiration of tax incentives, existing home sales fell 2.2% in May and mortgage applications to buy homes hover at 13-year lows.
What needs to be remembered here is that affordability is tremendous. Lower listing prices combined with mortgage rates lower than they were when the market was being “stimulated” by tax incentives should start creating some more positive trends. Take advantage of the opportunities that are available today. We have learned that traditional benchmarks and indices are not as reliable as they once were. Please guard against complacency…4-5% interest rates should not be considered the norm.
Tuesday, June 29, 2010
Friday, June 25, 2010
Mortgage Rates and How To Beat The Homebuyer Tax Credit
Mortgage Rates Continue To Drop
"Today's mortgage rates are officially the lowest rates I have ever seen in my 25 years in the mortgage business."
- Bob Germano, 6/24/10
I had a discussion with a colleague at the end of 2009 to discuss the forecast of the mortgage market. We had a friendly debate about how the economists at the bank he worked for were forecasting drastic reductions in mortgage origination volume for 2010, that the housing market would continue to decrease and mortgage rates would be dramatically higher by the middle of 2010. I disagreed, citing that housing needs to lead the charge back to economic recovery, that there were too many negative economic factors that had not really been dealt with yet and that if the past two years have proven anything, traditional forecasting tools may not predict as well as they used to.
I went back and researched where interest rates were at the beginning of 2010 and am happy to report that at the midway point of the year, not only have rates not gone higher, but they are actually about 1 1/2 percent lower than they were in January.
As a result, I am recommending to everyone I know:
- If you have a fixed interest rate higher than 5.25% , you should explore refinancing.
- If you are in an Adjustable Rate Mortgage, you should explore refinance options regardless of your current rate
- If you are thinking of purchasing a new home, buying a second home or investment property…now might be the best time to take advantage of both market pricing and payment affordability
With the sunset of the home buyer tax credit on 4/30/10, it is my opinion that this should not keep potential buyers out of the market. Believe it or not, there may be greater savings opportunities now than when the tax credit was available.
Consider these hypothetical scenarios*:
Here are the rates, payments and interest amounts based on interest rates as of 4/23/10:
Loan principal amount $417,000.00
Annual loan payments $27,632.28
Annual interest rate 5.250%, APR: 5.34%
Monthly payments $2,302.69
Loan period in years: 30
Interest in first calendar year $12,726.36
Base year of loan 2010
Interest over term of loan $411,968.40
First Payment Due: June
Sum of all payments $828,968.40
Here are the terms borrowers could have locked in on 6/24/10:
Loan principal amount: $417,000.00
Annual loan payments: $25,354.56
Annual interest rate: 4.500%, APR: 4.58%
Monthly payments: $2,112.88
Loan period in years: 30
Interest in first calendar year: $7,798.08
Base year of loan: 2010
Interest over term of loan: $343,636.80
First Payment Due: August
Sum of all payments: $760,636.80
*740+ credit score, full income documentation, purchase or no cash out refinance, 80% LTV . Rates change daily.
Based on the above, a loan on 6/24/10 would recoup $8,000 in 3 ½ years but more importantly, have a payment that is $190 lower and interest savings greater than $68,000 ($5,000 (e) in interest alone in the first year). If a consumer missed the tax credit expiration, they could possibly save more money by doing so.
I hope that people are running home to get their mortgage situations reviewed or calling their realtors to show them their next home. It's about time consumers can say the economy can work to their benefit.
"Today's mortgage rates are officially the lowest rates I have ever seen in my 25 years in the mortgage business."
- Bob Germano, 6/24/10
I had a discussion with a colleague at the end of 2009 to discuss the forecast of the mortgage market. We had a friendly debate about how the economists at the bank he worked for were forecasting drastic reductions in mortgage origination volume for 2010, that the housing market would continue to decrease and mortgage rates would be dramatically higher by the middle of 2010. I disagreed, citing that housing needs to lead the charge back to economic recovery, that there were too many negative economic factors that had not really been dealt with yet and that if the past two years have proven anything, traditional forecasting tools may not predict as well as they used to.
I went back and researched where interest rates were at the beginning of 2010 and am happy to report that at the midway point of the year, not only have rates not gone higher, but they are actually about 1 1/2 percent lower than they were in January.
As a result, I am recommending to everyone I know:
- If you have a fixed interest rate higher than 5.25% , you should explore refinancing.
- If you are in an Adjustable Rate Mortgage, you should explore refinance options regardless of your current rate
- If you are thinking of purchasing a new home, buying a second home or investment property…now might be the best time to take advantage of both market pricing and payment affordability
With the sunset of the home buyer tax credit on 4/30/10, it is my opinion that this should not keep potential buyers out of the market. Believe it or not, there may be greater savings opportunities now than when the tax credit was available.
Consider these hypothetical scenarios*:
Here are the rates, payments and interest amounts based on interest rates as of 4/23/10:
Loan principal amount $417,000.00
Annual loan payments $27,632.28
Annual interest rate 5.250%, APR: 5.34%
Monthly payments $2,302.69
Loan period in years: 30
Interest in first calendar year $12,726.36
Base year of loan 2010
Interest over term of loan $411,968.40
First Payment Due: June
Sum of all payments $828,968.40
Here are the terms borrowers could have locked in on 6/24/10:
Loan principal amount: $417,000.00
Annual loan payments: $25,354.56
Annual interest rate: 4.500%, APR: 4.58%
Monthly payments: $2,112.88
Loan period in years: 30
Interest in first calendar year: $7,798.08
Base year of loan: 2010
Interest over term of loan: $343,636.80
First Payment Due: August
Sum of all payments: $760,636.80
*740+ credit score, full income documentation, purchase or no cash out refinance, 80% LTV . Rates change daily.
Based on the above, a loan on 6/24/10 would recoup $8,000 in 3 ½ years but more importantly, have a payment that is $190 lower and interest savings greater than $68,000 ($5,000 (e) in interest alone in the first year). If a consumer missed the tax credit expiration, they could possibly save more money by doing so.
I hope that people are running home to get their mortgage situations reviewed or calling their realtors to show them their next home. It's about time consumers can say the economy can work to their benefit.
Monday, November 9, 2009
ID Theft in the Canyon of Heroes?
I had taken a few days from thinking of what to “blog” as I was enjoying the Yankee run through the World Series. As I set back my recliner late Friday night to watch the 11pm news re-cap of the ticker tape parade, I hear how some office workers got carried away during the Yankees victory parade and began tossing files and documents out the window when they could not get their hands on confetti. It has been reported that investigators found all kinds of personal financial documents in the mountains of shredded paper tossed from skyscrapers as the players rode up Broadway through the Canyon of Heroes. Documentation found on the ground included pay stubs, banking data, law firm memos and court files.
I routinely hear people say that they do not need identity theft protection…that it has never been an issue and do not wish to spend the money it takes to subscribe to an ID Theft Service. I have written in this space how ID Theft expands way beyond someone stealing your wallet or credit card. ID Theft is a preventive strike against a worst case scenario…a scenario you never want to endure. Is this worth a few bucks per month? If your name is on one of those documents on the ground in NYC…you bet it is!
I would love the opportunity to help you secure ID Theft Protection for you and the entire family. If you wish to go someplace else, that is fine…just do it today.
I routinely hear people say that they do not need identity theft protection…that it has never been an issue and do not wish to spend the money it takes to subscribe to an ID Theft Service. I have written in this space how ID Theft expands way beyond someone stealing your wallet or credit card. ID Theft is a preventive strike against a worst case scenario…a scenario you never want to endure. Is this worth a few bucks per month? If your name is on one of those documents on the ground in NYC…you bet it is!
I would love the opportunity to help you secure ID Theft Protection for you and the entire family. If you wish to go someplace else, that is fine…just do it today.
Tuesday, October 6, 2009
7 of 10 vs 3 of 10? I will take the 3!!!!
Do You Have a Will?
My wife will not even discuss these types of issues. In fact, when we drew up our estate planning documents, she had to get up and left the room all flustered. Who really looks forward to and wants to confront their own mortality and the issues that surround it? Neither one of us did, but knew it was something that we needed to do. If you have not done so…believe it or not you are in the majority.
Did you know that 7 out of 10 people have not created a Will? Think about that…7 out of 10! Those 7 people can and likely will cost their heirs (family members…the ones closest to them) a lot of money in avoidable estate taxes, lawyer/ probate costs and add tremendous stress to what is already a stressful situation. Who really wants a third party, judge or government official deciding who inherits their property, savings and personal belongings? For 7 out of every 10 people, unfortunately, this is precisely what will happen and what they should expect to happen.
Doing nothing and not thinking about it will not solve the problem.
Pre-Paid Legal Plans offer Wills (and Living Wills) as part of their basic membership package. If you do have a Will, you control who inherits your property, portfolio etc…. Further, if you are raising children under 18, you designate who will raise them. If you do not have a Will, you are designating an impersonal, beaurocratic court system to make critical decisions for the long term interests of those closest to you. No one wants to confront their own mortality and deal with these issues. If you choose not to, can you really say that you are doing the responsible thing for your spouse and children?
Suburban Solutions provides employer and membership groups with Pre-Paid Legal Plan programs, along with a menu of over 40 other lifestyle benefits. You can contact us should yo wish to inquire about how to access these types of services.
My wife will not even discuss these types of issues. In fact, when we drew up our estate planning documents, she had to get up and left the room all flustered. Who really looks forward to and wants to confront their own mortality and the issues that surround it? Neither one of us did, but knew it was something that we needed to do. If you have not done so…believe it or not you are in the majority.
Did you know that 7 out of 10 people have not created a Will? Think about that…7 out of 10! Those 7 people can and likely will cost their heirs (family members…the ones closest to them) a lot of money in avoidable estate taxes, lawyer/ probate costs and add tremendous stress to what is already a stressful situation. Who really wants a third party, judge or government official deciding who inherits their property, savings and personal belongings? For 7 out of every 10 people, unfortunately, this is precisely what will happen and what they should expect to happen.
Doing nothing and not thinking about it will not solve the problem.
Pre-Paid Legal Plans offer Wills (and Living Wills) as part of their basic membership package. If you do have a Will, you control who inherits your property, portfolio etc…. Further, if you are raising children under 18, you designate who will raise them. If you do not have a Will, you are designating an impersonal, beaurocratic court system to make critical decisions for the long term interests of those closest to you. No one wants to confront their own mortality and deal with these issues. If you choose not to, can you really say that you are doing the responsible thing for your spouse and children?
Suburban Solutions provides employer and membership groups with Pre-Paid Legal Plan programs, along with a menu of over 40 other lifestyle benefits. You can contact us should yo wish to inquire about how to access these types of services.
Friday, September 25, 2009
A Recent Discussion
I recently participated in a panel discussion where employers were asking "what are some good ideas on how they can provide low/ no cost benefits to employees…how can these benefits help attract / retain employees."
I responded by saying that when I sit down with executives regarding these types of questions, I discuss the value of turn-key, voluntary opt-in plans. My company can create and customize “bundles” that best supplement an organization’s existing benefit plan. Vision & Dental are as good as some others have stated in this discussion, just be careful you are not overpaying for these services. You can get much cheaper pricing in a bundled situation. On the medical side, I strongly recommend a telemedicine product and free pharmacy card. There is also value in providing Identity Theft Protection, Pre-Paid Legal Plans and Roadside Assistance. These programs, properly promoted within, should not only enhance engagement, but reduce associate absence and result in better customer service/ productivity. If you look to do these types of programs, look for multiple payment options too…payroll deduct, employer paid or partial employer paid. I also see employers place a great value on providing employees insurance options they can purchase on their own. One employer mentioned that LTD is voluntary in their organization…I see many employers make all kinds of insurance available via the workplace intranet…Non-Occupational Disability, Term/ Whole Life, Long Term Care, Cancer Insurance, etc…. Does not cost the employer anything to provide and employees can shop right from their desk.
I do not think I could have gotten more of a fastball right down the middle.
I responded by saying that when I sit down with executives regarding these types of questions, I discuss the value of turn-key, voluntary opt-in plans. My company can create and customize “bundles” that best supplement an organization’s existing benefit plan. Vision & Dental are as good as some others have stated in this discussion, just be careful you are not overpaying for these services. You can get much cheaper pricing in a bundled situation. On the medical side, I strongly recommend a telemedicine product and free pharmacy card. There is also value in providing Identity Theft Protection, Pre-Paid Legal Plans and Roadside Assistance. These programs, properly promoted within, should not only enhance engagement, but reduce associate absence and result in better customer service/ productivity. If you look to do these types of programs, look for multiple payment options too…payroll deduct, employer paid or partial employer paid. I also see employers place a great value on providing employees insurance options they can purchase on their own. One employer mentioned that LTD is voluntary in their organization…I see many employers make all kinds of insurance available via the workplace intranet…Non-Occupational Disability, Term/ Whole Life, Long Term Care, Cancer Insurance, etc…. Does not cost the employer anything to provide and employees can shop right from their desk.
I do not think I could have gotten more of a fastball right down the middle.
Thursday, September 10, 2009
Medical Identity Theft...I Am Not Kidding
Identity theft is a recurring theme that I like to address in this forum. For whatever reason, many people do not see this as the "needs based product" that it truly is. You would not drive a car without auto insurance. You would not want to start a family without a Will and life insurance plan (hey, I wrote about that under my Legal Plan posting). ID Theft has become (not is becoming, HAS BECOME) the #1 crime in America and believe it or not, extends way beyond someone stealing a credit card or social security number.
Believe it or not, ID Theft is growing at an unprecedented rate when it comes to receiving medical treatment. You cannot turn on the television, listen to a presidential sound byte or read a newspaper without hearing about the rising cost of health care and how difficult it is for many people to afford quality care. What do some people who cannot afford medical insurance turn to? Medical ID Theft.
Medical ID Thieves will use a victims identity and insurance information to receive the care they need. The real threat is not just the financial impact of the doctor/ hospital bills, but the fact that your medical records can be changed to those of the Identity Thief! Your blood type, medications, allergic reactions, etc... can all be changed to somebody else's history.
If there is any lingering doubt why identity theft protection is something everybody in America should have, watch this video.
http://www.youtube.com/watch?v=2NrLryd9o7I
Now fill in the blank: "I, (state your name), do not have Identity Theft Protection because__________________________________________________. (hint: no good answer to this question.)
Obviously I would like to help you with your acquisition of an ID Theft program...but no matter where you go to get it...just get it TODAY!
Believe it or not, ID Theft is growing at an unprecedented rate when it comes to receiving medical treatment. You cannot turn on the television, listen to a presidential sound byte or read a newspaper without hearing about the rising cost of health care and how difficult it is for many people to afford quality care. What do some people who cannot afford medical insurance turn to? Medical ID Theft.
Medical ID Thieves will use a victims identity and insurance information to receive the care they need. The real threat is not just the financial impact of the doctor/ hospital bills, but the fact that your medical records can be changed to those of the Identity Thief! Your blood type, medications, allergic reactions, etc... can all be changed to somebody else's history.
If there is any lingering doubt why identity theft protection is something everybody in America should have, watch this video.
http://www.youtube.com/watch?v=2NrLryd9o7I
Now fill in the blank: "I, (state your name), do not have Identity Theft Protection because__________________________________________________. (hint: no good answer to this question.)
Obviously I would like to help you with your acquisition of an ID Theft program...but no matter where you go to get it...just get it TODAY!
Wednesday, August 12, 2009
The Biggest No-Brainer Ever!
I was recently shopping for health insurance for me and my family. I researched small business plans that turned out to not be very attractive at all. I then went to an on-line quoting engine (my own portal is not configured for NJ yet) and within seconds of completing a quick, informational type screen with my basic personal information had various offers to choose from ranging from Plan Type, Price (lowest to highest) and Carrier. Getting to the quoting screen was a pretty easy, seamless process. Once there however, it is very easy to be intimidated and throw your hands up in disgust.
First, in the quoting engine I was using, distinguishing between the different plan types and trying to figure out what type of plan covers what. In my opinion this alone would make the average user give up right there. Second, I have a Health and Life Insurance license and understand what the various types of insurance plans are…but between PPO, EPO, HMO, Blue Cross Blue Shield, No Deductible, High Deductible, (No) Long Term Hospital Care, Co-insurance, no Co-insurance, Prescription coverage or not, Dental but maximum $500 per year…it is very easy for an individual to get confused and purchase a plan that they may think is different than what it actually is.
When I made the decision on what insurance plan I was ready to buy, I was then required to complete a full application on-line. This application took almost 30 minutes to complete and again, this process had me thinking how many people get frustrated and stop, or do not have the time to complete all the information at one sitting and due to the investment of time required never return to complete.
This kind of begs the question: is technology making this process easier and less expensive, or is the price similar to going to an agent in-person and paying a bit more?
Where the technology debate can go on for years and years, there is one debate that cannot: Discount Medical Benefits. Discount Medical Benefits can supplement health insurance policies in so many ways it is unbelievable. I was recently in San Francisco and engaged in a conversation with someone near The Wharf about why I was out there and what type of business I am in. When I explained that I was in the supplemental benefits business and highlighted some of the plans offered, he asked if our packages cost about $200/ mo. When I responded with where our price points typically fall he was totally amazed…asking why everyone in America would not purchase our benefits? I could not agree more.
Getting back to my insurance quoting experience, it amazes me how many people could make better educated decisions if they knew that for < $5 per week they would gain family membership access to Dental, Chiropractic, Vision, Vitamin and Pharmacy discounts, while eliminating co-pays for non-emergency doctor visits by calling a telemedicine service that has script ability. I made my decision on which insurance to buy based on the fact that I have a discount medical plan already in place. I chose a plan $250/ mo less than I would have had I not had a discount plan. Imagine being able to reduce monthly insurance costs, save time and energy from visiting a doctor, eliminate co-pays in many cases and have access to below market pricing for other “health” services…for the whole family?
Discount Medical Plans are perhaps the biggest no-brainer ever. I just saved a minimum of $3,500 per year when I factor in my monthly savings and the ways my discount plan will save me money throughout the year. With all the talk of Obama health care reform, the rising costs of health insurance, increased employee contributions, decreased coverage, etc….I think the guy in San Francisco said it best: “Why wouldn’t everyone in America have our Discount Medical Benefits?”
If you want additional information on how YOU can acquire, please contact me via email at bob.germano@suburbansolutionscorp.com or 866-528-6208, ext 122.
I was recently shopping for health insurance for me and my family. I researched small business plans that turned out to not be very attractive at all. I then went to an on-line quoting engine (my own portal is not configured for NJ yet) and within seconds of completing a quick, informational type screen with my basic personal information had various offers to choose from ranging from Plan Type, Price (lowest to highest) and Carrier. Getting to the quoting screen was a pretty easy, seamless process. Once there however, it is very easy to be intimidated and throw your hands up in disgust.
First, in the quoting engine I was using, distinguishing between the different plan types and trying to figure out what type of plan covers what. In my opinion this alone would make the average user give up right there. Second, I have a Health and Life Insurance license and understand what the various types of insurance plans are…but between PPO, EPO, HMO, Blue Cross Blue Shield, No Deductible, High Deductible, (No) Long Term Hospital Care, Co-insurance, no Co-insurance, Prescription coverage or not, Dental but maximum $500 per year…it is very easy for an individual to get confused and purchase a plan that they may think is different than what it actually is.
When I made the decision on what insurance plan I was ready to buy, I was then required to complete a full application on-line. This application took almost 30 minutes to complete and again, this process had me thinking how many people get frustrated and stop, or do not have the time to complete all the information at one sitting and due to the investment of time required never return to complete.
This kind of begs the question: is technology making this process easier and less expensive, or is the price similar to going to an agent in-person and paying a bit more?
Where the technology debate can go on for years and years, there is one debate that cannot: Discount Medical Benefits. Discount Medical Benefits can supplement health insurance policies in so many ways it is unbelievable. I was recently in San Francisco and engaged in a conversation with someone near The Wharf about why I was out there and what type of business I am in. When I explained that I was in the supplemental benefits business and highlighted some of the plans offered, he asked if our packages cost about $200/ mo. When I responded with where our price points typically fall he was totally amazed…asking why everyone in America would not purchase our benefits? I could not agree more.
Getting back to my insurance quoting experience, it amazes me how many people could make better educated decisions if they knew that for < $5 per week they would gain family membership access to Dental, Chiropractic, Vision, Vitamin and Pharmacy discounts, while eliminating co-pays for non-emergency doctor visits by calling a telemedicine service that has script ability. I made my decision on which insurance to buy based on the fact that I have a discount medical plan already in place. I chose a plan $250/ mo less than I would have had I not had a discount plan. Imagine being able to reduce monthly insurance costs, save time and energy from visiting a doctor, eliminate co-pays in many cases and have access to below market pricing for other “health” services…for the whole family?
Discount Medical Plans are perhaps the biggest no-brainer ever. I just saved a minimum of $3,500 per year when I factor in my monthly savings and the ways my discount plan will save me money throughout the year. With all the talk of Obama health care reform, the rising costs of health insurance, increased employee contributions, decreased coverage, etc….I think the guy in San Francisco said it best: “Why wouldn’t everyone in America have our Discount Medical Benefits?”
If you want additional information on how YOU can acquire, please contact me via email at bob.germano@suburbansolutionscorp.com or 866-528-6208, ext 122.
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