Thursday, June 14, 2018

Shelf Life of a 30 Year Loan

Over the years, in my mortgage business where I usually the standard 30-year loan for most of my clients, I have noticed one thing.

My clients have been losing an average of $140 per month for about 5 to 7 years at a time.  That’s an average of $8,400 to $11,760 which they could have in their savings, rather than paying it to the bank for what most would say is “peace of mind”.  

Yet, if you ask me, having that money in my bank account would be even more peaceful.  😊

Most banks put a shelf life of 5 to 7 years on the 30-year loan. Why?  

Because, everyone’s life changes quite a bit within that time.

Think about it: What was your life like 7 years ago?  And seven years before that?  What about 7 years from now?

Because of this, my clients and most people in the country, refinance about every 4 to 7 years. 
Within this time so many things can happen:

o   People get married
o   People get divorced
o   Have a child
o   Lose a job
o   Change jobs
o   Have a parent move in
o   Children getting married
o   Children going to college
o   Rates drop
o   Sell to upgrade or downgrade the home

Because of these life changes, people usually need to change their mortgage to assist them with what they are needing in their life.

There are some other loans that will work great for these people. Yet, most everyone wants the “security” of the 30-year fixed, so they usually opt for this loan and commit to a higher rate and payment for the next 5 to 7 years.

These other loans are known as ARM’s:  adjustable rate mortgages that are 30 year loans and they are only fixed for: 3, 5, 7 and 10 years.  They all offer a lower rate and shorter fixed period that will provide higher savings over that time, compared to the 30-year loan.

So let’s say a client has this 400K loan:
  • 30 year fixed is 4.875% = $2,116.33  / mo.
  • 10/1 arm is 4.5% = $2,026.74.  $89.59 savings ($1,075.08 / year) over 5 years $5,375.40
  • 7/1 arm is 4.25% = $1,967.76. $148.57 ($1,782.84 / year) over 5 years $8,914.20

The hardest part about getting these savings is getting over the “fear” of the adjustable rate loan. 
I’ve even had clients want to buy down the rate to the 10/1 arm so they pay 1.5 points.  A point is a % of the loan. 

So paying 1.5 point is paying 1.5% of the loan amount:  on a 400K loan that’s 6K.
Again the idea is:  "This is the last loan I’m gong to get",  and I want the payments low and after a 5 years I’ll be paying less.

Yes, that is true. IF, and it’s a big IF, you keep that loan for 30 years or even just 10.  

Yet inevitably 4 to 7 years later, I end up getting the call.  Hey Cezar, how are things? My daughter is going to college this year and we need about 40K to pay for tuition and to fix up the house a bit. What are the rates today?  And guess what, they are asking about the rate for another 30-year fixed loan.

That’s it, their mortgage payment was not only higher every month for 5 years, but the balance is higher too because they rolled those points into the loan last time.

It’s hard to get past this fear of the Adjustable…  rates could go higher by then.  My response to that is yes, they may be higher. Yet, most likely they will be needing to refinance at that time anyway.

What I have also noticed is how hard we work and bust our butts to make sure we pay everyone else, yet when it comes to ourselves, we just slack off.

So the next time you sit down to think about your mortgage and the largest payment you have, think about how your life is going to change and if you can be comfortable with the ARM product.  Heck, at least look at the numbers.  The savings could be huge over 10 years and that extra money in the bank will offer much more peace of mind while you’re refinancing for the 3rd time in 15 years.

If you find this information interesting, or helpful and want to hear more on this topic, please let me know, and feel free to reach out and setup a meeting to review your situation.

Friday, February 17, 2017

My CPA always gets me 
the most tax deductions!

It’s that time of year again. We are all preparing and getting our income taxes done, both for personal and business, with the goal being to get as much cash back or pay the least amount in taxes possible.  

Heck! If your CPA or tax preparer doesn’t try to help you get all the deductions there are available to you then they aren’t doing their job, right? 

It’s all great UNLESS you plan on getting a home loan or buying investment property within the next 2 years.  You should be aware that the banks count deductions against you and sometimes will say you don’t qualify because of them.

Here is a typical scenario of an affluent couple in LA getting turned down for a home loan: They have an interest rate of 6.0%, are making all their monthly payments on time and are now trying to lower their payments with an interest rate of 3.875%.

Frank and Heather are the normal LA couple who both work, have kids and a home they have lived in for more than 10 years. They also have healthy retirement accounts of 100K+ in each at least 3 months’ worth of cash reserves in the bank.  Oh, and their credit is stellar at 720+, they are never late with payments and always pay their credit cards off every month.  (okay, maybe they are more perfect than most, yet you get the idea)

Here they sit with their income crossing over that 6-figure mark with ease, their home has a lot of equity and more than half the loan they are seeking is in a retirement account or sitting in reserves. Their credit score, is well over 720, YET they do not qualify for a home loan. Why? Because of how their taxes look and what they show as taxable income. That's it, “taxable income”. 

This is how it looks: Both Frank and Heather claimed unreimbursed business expenses for $5,500 each per year. Franks' employer did not pay for the repairs on the vehicle that he used for work. In addition, Heather went to school to get her Master’s degree and the company did not pick it up the tuition.   Both deductions qualify and were legitimate, yet had they not taken them they would have qualified for their loan.

This deduction of $11,000 per year averages out to $916.67 per month.  The banks will claim that this is the cost for them to earn their salary, and remove if from their monthly income,

Therefore, because of these deductions, they do not qualify for a “lower payment” than what they currently have, even though they have NEVER been late on those payments. I don’t know about you, but I think that this is a private tax on the middle class.

Yet that is the law of our land after the 2010 Dodd-FrankAct.  These new guidelines are in place and require the banks to hold these items against you. Basically, requiring you to not take the deductions so you can qualify and forcing you to pay more taxes than needed.  Like I said, I think it’s a private tax on the middle class.  

So… this year as you sit with your CPA or Turbo-tax software, ask yourself this question: Do I currently qualify for a home loan with the income I showed in my 2016 and 2017 tax returns?

The reason for writing this article is that I began to realize how few people actually don't have a good certified mortgageplanner as part of their professional team.  Those people end up frustrated because they do not qualify for a home loan. If  they had been advised differently before they filed their taxes, they would have qualified without any issues.

A good CPA will make sure that you pay the least amount of taxes and save you as much as possible. However, a GREAT CPA will consult with you and a Certified Mortgage planner to review your goals about refinancing or purchasing property within the next 2 years. This will insure that you can take advantage of historic low rates and save thousands of dollars per year in payments, or help you to qualify and get that excellent investment property that you have been planning to buy.

My advice is to meet with a Certified Mortgage planner like myself and have them review your income and tax returns to confirm if you qualify or not. If you don't qualify, they can help you determine what you will need to claim on your taxes to qualify for that loan you want.  You can then take this information to your CPA and instruct them on how you would like your taxes filed.

If you find info helpful, or not, and want to hear more on this topic please let me know by commenting on this blog. Additionally, please feel free to share it with friends, family and co-workers.

Thursday, October 1, 2015

Federal Reserve rate rise in October?

It seems that most of the markets are just waiting to see what the Fed will do, however it also looks like the Fed is waiting on the markets to move in a way to allow them to raise interest rates.

Video on possible Fed Rate Hike

With all the negative news coming out of Syria regarding the Russians and the USA clashing on what is actually needed in the Middle East, we can expect the 30 year rates to stay lower for a while even if the Fed does raise short term interest rates, as investors will keep their money in safe US Bonds, until this all gets resolved.

Raising short term rates will mostly affect people who have an "Home Equity Line of Credit" (HELOC) usually it's that adjustable line of credit that we have as a 2nd on our homes.

If and when the Fed raises rates, it will only help the banks in this case, as it will cost homeowners more every month and the banks will make more on the loans they already have out there.

If they raise them quickly like they did in the early 2006's then we will see a slowing of the economy again as people will just have less money to spend,

It will also cost business to borrow capital which will ultimately require them to cut back on expenses (layoffs) or raise prices to stay in business, again hurting the average person trying to put their kid through school or just keep up with the normal bills.

If you find this info helpful, funny or interesting, and want to hear more on this topic please let me know by commenting on this blog, as well as, sharing it with friends, family, and co-workers 

Thursday, August 7, 2014

In-N-Out Burgers is a West Coast institution. And one of the keys to their success has been keeping it simple.

There are only four food items on the In-N-Out menu:

  • Hamburger
  • Cheeseburger
  • Double-Double
  • French Fries.

 In-N-Out compliments the food with the standard array of Coca-Cola beverages and three shakes: chocolate, vanilla and strawberry. And that’s the menu in its entirety

At least that’s what they want you to think. 

The truth of the matter is that there is an extensive “secret menu” available for those in the know. In fact, the secret items actually outnumber the items legitimately on the menu.
This isn’t just stuff made up by bored employees. If you order a Flying Dutchman, “Flying Dutchman” prints out on your receipt. It’s in the computer.
There is lots of information out there on the Internet about the secret menu, but no one seems to have gotten it all, and a lot of what is out there is just plain wrong. Nothing is more embarrassing than ordering a secret item that doesn’t exist.
So, through dilligent research, we have managed to produce what we believe is the definitive guide to the In-N-Out secret menu.



In-n-Out: 2X4 Protein Style
In-n-Out: 2X4 Protein Style
A “2×4″ is a burger with two beef patties and four slices of cheese. You can also order a “3×3,” a “4×2″ or any other meat/cheese combo your little heart desires. In the past, we’ve seen burgers as large as a 100×100, but In-N-Out changed their policy and now a 4×4 is as large as you can get. We managed to get ourselves a 20×20before that rule went into effect, though.


In-n-Out: 2xMeat with Grilled Onions
In-n-Out: 2xMeat with Grilled Onions
(Also known as a “Double Meat”) Two beef patties, no cheese. You can order any n-by-Meat, wheren is an “integer less than or equal to 4.” Triple the meat, triple the pleasure. Need your colon impacted, but don’t want to spend years waiting for it to happen? In-N-Out has the burger for you.

Animal Style

In-n-Out: Animal Style Burger
In-n-Out: Animal Style Burger
A mustard-cooked beef patty with additional pickles, cheese, spread and grilled onions diced up and mixed together on the grill before getting dumped on your burger. This is probably the most famous secret menu item, and for good reason: it’s pure awesome on a bun. You can get any burger done Animal Style.


In-n-Out: Cheeseburger Cut In Half
In-n-Out: Cheeseburger Cut In Half
No big trick here. Ask for any burger to be cut in half, and it will be. As the parent of two girls under five, this makes ordering their meal a lot easier.

Flying Dutchman

In-n-Out: Flying Dutchman
In-n-Out: Flying Dutchman
Two beef patties, two slices of cheese. That’s it. No lettuce. No onions. No bun. No nuthin’. Word on the street is that this item was created for people to feed to their dogs at one of the original In-N-Out’s with walk-up service. That sounds plausible to me. Coolest sounding item on the menu. Try tricking a friend into ordering one Animal Style.

Grilled Cheese

In-n-Out: Grilled Cheese
In-n-Out: Grilled Cheese
A cheeseburger without the “burger.” My niece always orders the grilled cheese because she doesn’t eat beef and “veggie burgers are boring.” You still have lettuce, onions and tomatoes — as well as a nice helping of the spread. Can also be ordered Animal Style.

Mustard Grilled

They paint your burger with mustard before grilling just like with Animal Style. They just don’t dump the rest of the stuff on top. Pretty tasty if you like mustard.

Protein Style

In-n-Out: 2X4 Protein Style
In-n-Out: 2X4 Protein Style
Any burger on the menu, wrapped in lettuce instead of that carbohydrate-laden bun. Great if you’re doing Adkins. Any diet where you you can eat all the bacon you want but you can’t have a slice of bread sounds suspicious to me, though.

Veggie Burger

Just like the Grilled Cheese, except with no cheese. Also known as a “Wish Burger” — presumably a reference to a song from 1957 by the Chips.

Extra Toast

Leaves your bread on the grill a tad longer resulting in “crispy buns,” which is not as dirty as it sounds. Can be ordered with any burger. You can also get the bun lightly toasted or untoasted. Not a good idea though. They toast the buns so that they have some rigidity and don’t get soggy by the condiments.


Animal Style Fries

In-n-Out: Animal Style Fries
In-n-Out: Animal Style Fries
All the same great stuff that’s on an Animal Style Burger, dumped on an order of fries instead.

Cheese Fries

In-n-Out: Cheese Fries
In-n-Out: Cheese Fries
Fries with cheese on top. I assume this is why they call it “cheese fries.”

Fries, Light

In-n-Out: Fries Light
In-n-Out: Fries Light
Fries not cooked as long as regular. For that great “I’m eating a raw potato” taste. Not my favorite, but hey, different strokes for different folks.

Fries, Well-Done

In-n-Out: Fries, Well-Done
In-n-Out: Fries, Well-Done
You know those delicious little brown crispy fries that you find in the bottom of the bag sometimes? Wouldn’t it be great if you could get an entire order of them? You’re welcome.


Neapolitan Shake

In-n-Out: Neapolitan Shake
In-n-Out: Neapolitan Shake
All three shake flavors in one delicious cup. Because shakes are so thick, the flavors stay separated. Surprisingly good..

Choco-Vanilla Swirl

“Ebony and ivory live together in perfect harmony…”

Root-Beer Float

In-n-Out: Root Beer Float
In-n-Out: Root Beer Float
Even old hands at the secret menu are often surprised when you order this item and actually receive it. Great summer treat.


Half tea, half lemonade. Yes, we know this is an “Arnold Palmer.” Stop telling us. I suspect In-N-Out is also aware this is an Arnold Palmer. I also suspect you would need to pay Mr. Palmer money to call it that, so In-N-Out chooses not to.


Half lemonade, half 7-up or Sprite. Not all suicides are created equal, and this one tastes pretty good.



In-n-Out: The Spread
In-n-Out: The Spread
The In-N-Out version of a “secret sauce.” It’s a bit like Thousand Islands dressing, but there are other things in there, too. You can get a big extra packet of it just by asking.

Grilled Onions

In-n-Out: 2xMeat with Grilled Onions
In-n-Out: 2xMeat with Grilled Onions
You can get them “whole” (one big slice) or chopped.


In-n-Out: Peppers
In-n-Out: Peppers (or Chilis)
You can ask for a packet, or get them diced on the bottom of your burger by asking for “chopped chilis.” Several sites refer to them as “jalapenos.” They look like peppercinis to me.

Extra tomatoes, extra lettuce, extra onion

Do I really need to explain this? I mean really?

No Salt

You can order both your burger and fries with no salt added. This makes them taste worse, but they are marginally better for you. If you are really worried about your health, you’re in the wrong restaurant.

If you find this info helpful, funny or interesting, and want to hear more on this topic please let me know by commenting on this blog, as well as, sharing it with friends, family, and co-workers 

Sunday, June 22, 2014

Got a 401K from an old Job?  ING will pay you up to 5% to move the money.

$100,000 401K will pay $5,000 just to move it, with no transfer costs. Pretty sweet!

Process takes about 2 weeks.

Message or call me to discuss.

Wednesday, January 2, 2013

2013 Business plan... do you have one?

2013 is here, have you made your business plan for the year?  if so, keep reviewing it and make it bullet proof.

if not, then start... start small, and it will come together. its best to work backwards...
How much $$ do you want to make?
How many clients will you need to make that $$?
How will I get these clients?
What will I send them for marketing?

Answer these questions and you will be ahead of most people.

Here's to your best year ever!

Monday, October 29, 2012

New York Stock Exchange closes due to Hurricane Sandy

NYSE Closes for Hurricane Sandy -Reuters photo
While Los Angeles is enjoying some warm weather due to the Santa Ana winds, our friends in New York City are shutting down due to hurricane Sandy.

For the first time in years the NYSE closed before it even opened due to the severe weather conditions of hurricane Sandy.

Sand Bags lined the street this morning in front of the NYSE in lower Manhattan today, while everyone prepares for one of the worst storms to hit NYC in years.

"A shut down of trading for a couple of days to save one human life is the right thing to do".  Dick Grasso former NYSE Chairman and CEO.

Mortgage rates are slightly lower than Friday, however not much is expected today due to the shut down.

check out more articles from CeezMann the LA Mortgage Examiner

If you find this info helpful, funny or interesting, and want to hear more on this topic please let me know by commenting on this blog, as well as, sharing it with friends, family, and co-workers