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.

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.

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 

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.

Burgers

2×4

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.

2xMeat

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

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.

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

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

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

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.

Fries

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

Fries with cheese on top. I assume this is why they call it “cheese fries.”

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

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.

Drinks

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

Even old hands at the secret menu are often surprised when you order this item and actually receive it. Great summer treat.

Tea-Aid

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.

Lemon-Up

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

Extras

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

You can get them “whole” (one big slice) or chopped.

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 

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.
310.710.5091

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!

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 

Club parents taking advantage of low rates and supporting our economy

Click here to buy on Amazon.com

Over the past few years in my meetings with clients and reviewing their income verse their spending ratios, I discovered what I think is an underground economic movement that is stimulating and sustaining our economy by taking advantage of these low mortgage rates.

The drivers of this underground movement are the parents of kids in traveling club sports.

They are buying gas, Subway sandwiches, uniforms, pop-up shades, making hotel reservations, purchasing plane ticket, and paying for rental cars.

Take the typical 3 day tournament in San Diego and your team is based out of Los Angeles, with a first game start time of 8:00 am and warm-ups at 7:00 so an overnight stay is a must.

If the sport is soccer, baseball or water-polo you can expect 15 to 20 families booking hotel reservations and dining out for a minimum of 2 nights at a cost of $600 to $800 dollars with trips to SeaWorld or Wild Animal Park not included.

Multiply this with the thousands of families attending these tournaments which are going on across the state each and every weekend, and it's easy to see how the numbers add-up in terms of sales-tax collected, and goods sold.  These numbers ultimately translate into keeping businesses open and jobs in place thus sustaining our economy.

In some cases, it's almost like they make-up ways to spend money, driving from Redondo Beach to Pleasanton (Northern California) for a weekend college showcase just to play a team that is based out of Palos Verdes a city right next door them.

These are the people that seem to benefit most from an interest rate reduction on their home loan as they make up a large portion of the population that keeps our economy moving.

Saving $200 to $500 bucks on their mortgage payment every month means freeing up needed cash to spend on their kid’s sports rather than struggling to make this happen, and sacrificing their savings or purchasing that new car.

The one thing that runs true for all these families is putting their kids needs and desires above their own, so they pay for that extra out of town tournament and do without in other areas such as savings, investing, or that new car which also keeps more people employed.

So the next time you see that kid with the sports uniform in line at Subway, be sure to thank their parents for supporting our economy.

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

Record low rates, yet refinances fall sharply

Interest rates today have fallen yet again claiming the best rates on record, however many people in LA and around the country are finding that they do not qualify and the main reason being that they just do not have enough equity.

How much equity do you need?  At least 20% to get the good rates, and 40% if you want the screaming rate, the rate that's advertised on the radio, internet and TV.

These people that cannot qualify are earning the money and have the credit needed, yet they don't have the equity, and Fannie or Freddy do not own their loan so they do not qualify for the HARP program or any other government programs.


Therefore, they are what seems to be just left out in the cold, and not able to partake at the table of low rates and improved prosperity for their family.


So what can be done for these people who pay their bills on time, have great credit and stable jobs with income taxes to prove it?


Currently not much, unless they want to take a crack at getting a loan modification, however they need to deal with their credit being smeared for a few years.

The other reason are tighter lending standards for the self-employed in regards to taxable income qualifications, and less than stellar interest rates.




My advise is meet with a Mortgage planner and have them review your income to confirm if you qualify or not, and if not, determine what you will need to claim on your taxes to qualify for that loan you want.

What does qualify mean? 45% of your "gross" income can go towards this only.
• Home loans
• Credit cards
• Property tax
• Home insurance
• Student loans
• Car loans

If you are over this, by a few percent you "may" qualify yet not for the best rates.

If you find this info helpful, or not, 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

Europe's Club Med States responsible for your low interest rates

We are half way through 2012 and the news says our economy is picking up. Yet, the small business sector says they don't feel it as the unemployment rate is still hovering at 11.8%. here in LA.

This past 6 months the European debt is leading the news regarding their own financial meltdown that is being felt globally. 

It seems that Round 1 of the Global Credit Crisis went to us, the United States, with housing mortgages. Round 2 is a new version of "Sub-Prime" and that is "National Debt".  Italy, Greece, Spain, Portugal and now Cyprus  (a.k.a. Club Med) will need to be bailed out in order to not declare bankruptcy.  

As it turns out, Germany is the mainstay of the Euro and the sport of soccer with 3 World Cup titles and countless Euro champions, and while most of these countries feel the dominance of German in soccer,  the Germans are baring the brunt of  the Club Med States debts.  However, like here at home, they will need to make big changes in order to insure that it does not happen again.

With all this fear of debt that the Euro Club Med States have accumulated has a caused a flight to safety, which is our US Bond Market.  the more these investors buy our bonds along with the Federal Reserve's own "Operation Twist" of purchasing of these bonds has driven home interest rates to below record levels.  It's crazy how many LA homeowners have refinanced once per year for 3 years in a row, and having the bank pick all the fees every time. 

Operation Twist explained (audio and text)


Housing prices and interest rates are at historic lows so, if you are looking to refinance, or purchase, now is the time to take advantage of this.


In meeting with clients, we often see well-meaning people who think that they arre doing the right thing by paying more towards their mortgage instead of increasing their savings first.  I am compelled   to ask them why not take care of the family bank first?  It is wise to pay off your mortgage, however, only after you have  taken care of the family bank first.

This means that before you pay down your mortgage, It is a wise move to have at least one year's worth of expensess in your savings account.  Depending on your circumstances, it is also wise to have a college and/or retirement fund that is well established. Only after those items have been put into place is it advisable to look at your mortgage and determine if paying it off will be beneficial. 

You see, the banks, being in the buisness of making money, will not look out for your family.  Even though you have been making extra payments, they will not let you slide a few months while you are in- between jobs.  In fact, what they will do, is ruin your credit and make it difficult for you to borrow money again.

Still to this day, the old adage is true.  " A penny saved, is a penny earned."  What I believe this means to you and I is just this...If you are looking to boost your financial security, you must plan to have some "just in case money" set aside.  The facts are simple.  If you don't have a job, I can't get you a loan; however, if you have one year's worth of expenses saved, you don't need a loan.

Like I have always said, "Don't worry. Things always work out. Just pay your payments on time and keep as much as you can in savings."

If you have not already done so, schedule a time to meet with your Mortgage Planner to and review your current situation.

If you find this info helpful, or not, 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

For more questions on this or any other: Mortgage- Insurance - Merchant Services questions feel free to contact me at cezar@cezarmansour.com

April kicks off the Real Estate Season... Gives glimpse to how things will play out!

April is the first month of the second quarter and always marks the start of the real estate season. Daylight savings is in full swing and more and more people are looking to buy, sell, or refinance their homes. The business we start to see towards the end of April and beginning of May is usually a good indicator of how things will shape up for the summer season.

April seems to be a busy month with tax returns due, Easter holiday celebrations, and also spring break for those of us who have school age children. There are a couple more holidays/celebrations with Memorial Day weekend and also Fourth of July, however these seem to be a more carefree time to spend barbequing with friends and family rather than cooking up big turkey dinners and gift buying.

With all the busyness of the major holidays and the dark side of daylight savings behind us, the numbers for April are pointing to a much improved real estate season compared to the last few years. Interest rates are still at record lows and the home prices within Los Angeles County have dropped by about 6% in the last year. It’s no wonder that pre-approval letters for prospective home buyers have increased by about 25% for most mortgage brokerages across the L. A. area.

Refinances still make up about 78% of the mortgage business at present time with many making sure that they still get that low rate. Actually, rates have dropped so low that many home owners have refinanced twice in the last 14 months while having the bank pick up all the one time costs.

Fed Underestimated the Housing Crisis


As always, if you are thinking about either buying, selling or refinancing, this is the time to meet with your mortgage planner to have a review of your finances and home value to see what needs to happen in order to meet your goals of home ownership and also retirement.

April numbers:
$345,000 Medium home value in LA
$69,200 Median income in LA
3.875% for a 30yr fixed with no points
58 days is the average time a home stays on the market in LA

If you find this info helpful, or not, 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

For more questions on this or any other: Mortgage- Insurance - Merchant Services questions feel free to contact me at cezar@cezarmansour.com

97th Anniversary of the Armenian Genocide

“Where there are two Armenians, you have Armenia”

Little Armenian one of LA's best places to get some excellent Kabob and Humus, as well as many other tasty Armenian dishes was a buzz just before 10:00 am. on the corner of Hollywood & Hobart. this is where the ceremony march took place remembering the 97th Anniversary of the Armenian Genocide.

It was Hitler when asked if he thought he could get away with killing the Jews that said. “Well who remembers the Armenians?”

An estimated 1.5 million Armenians died from 1915-23 in what has been called the first genocide of the 20th century.

The story is passed down from generation to generation about what happened to the Armenian people who lived in Turkey during 1915 to 1923. More than 200,000 children were left without parents.

Their is a great article in the daily Breeze about the Genocide, its history and how the United States and Turkey still do not recognize that it actually took place.

The memorial museum located in Montebello is an excellent place to see the photos and hear the story of the 1st genocide of the 21st. Century.

Today there are almost 500,000 Armenians living in Los Angeles

This week is a great time to get down to little Armenia and taste the foods and meet the people that will never forget why they currently call Los Angeles home.

If you find this info helpful, or not, 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