Back to Basics Step 2

Continuing our discussion on the basics. Here is step two:

Identify the good debt

For the most part, it’s usually not a good idea to pay off your home mortgage unless you have a lot of extra cash. After all, Uncle Sam refunds part of your interest payment if you itemize your deductions on your tax return.

Use your money instead to invest in liquid assets. However, Randall recommends paying off your mortgage (and any other debt you might have) by the time you retire so you can get by on less money.

Don’t be in a rush to pay off student loans, either. The old rule that allows a tax deduction only for interest paid during the first five years of repayment is ending. Qualifying interest on student loans can be written off no matter how long it takes to pay off your loans.

However, you can ease the burden of repaying your loans. Thanks to recent legislation, you can now shop around for the best terms. For example, lenders may offer a rate reduction if you elect to have your loan payments automatically deducted from your bank account. And some lenders will knock more off your rate after 24 or 36 months of on-time payments. Compare deals at ConsolidationComparison.com.

 Source: Kiplinger.com

My thoughts: Debt is Debt! It’s what keeps me up at night. If you don’t have debt you can worry a lot less about the economy, your job or your income.  Be careful when it comes to “investing” in a large purchases, like cars, that depreciate rapidly. There is school of thought that advises that the best way to pay for a car is not to finance but pay cash. The question is; why would you take money out of your pocket to buy something that will be worth less than you paid for it the moment you take possession. Think about it, would you invest in stock when you knew for certain that the value of that stock would go down? Consider this, someone once told me that if it can appreciate then buy it. If it depreciates, then rent it or finance it. If you can pay cash, keep the money in the bank and make payments from that fund. Most manufactures offer zero or close to zero financing. Leave your money in the bank and let it appreciate.

That’s what I think, how about you?

6/29/09 Mortgage Commentary

Mortgage Market CommentaryThis weeks economic calendar is compacted into three days instead of the usual five, with no reports due out on Monday and with the markets being closed on Friday ahead of the 4th of July weekend. Tuesday information on chain sores sales from ICSC-Goldman & Redbook, the S&P Case-Shiller Home Price Index (HPI), Chicago Purchasing Manager Index (PMI), and Consumer Confidence all set to released. In addition, there is prominent Fed officials giving speeches, so investors will be paying close attention. On Wednesday, we get a glimpse of the labor market from the Monster Employment Index, Challenger Job-Cut Report and ADP Employment Report. Mortgage application information is provided by the Mortgage Bankers Association’s weekly survey. Major reports due are the ISM Manufacturing Index, Construction Spending and Pending Home Sales Index, all set for 7am pt. Then comes Thursday, when the all important June Employment Situation will be released by the Labor Department, detailing the non-farm payroll numbers, unemployment rate and average hourly earnings. To further increase the drama, Jobless Claims, Factory Orders and the Treasury’s announcement of the size 3yr, 10yr and 30yr securities to be auctioned the following week finish the short week. The amount of information in such a short time frame needed to be digested by traders can lead to extreme volatility, especially in front of a 3 day weekend. Buckle up, it may be a bumpy ride.

Back to Basics

As we all move through these trying economic times, I thought it might be useful to talk about subjects that will help us all not only survive but, dare I say it, thrive. Let me say from the beginning that I do not have all of the answers. The information provided will be a combination of my thoughts and those who are experts in the field.

A wise person once said that wisdom comes from knowing what you know, knowing what you don’t know and knowing who knows. I plan to use all of those traits in these articles. Please share your thoughts and resources you have found helpful. We can all learn from each other. Remember: What we can’t do alone, We can do together. With that being said, let’s start with the basics.

Note: We have changed the way we post to the blog. Starting today, you will see new blog posts on the front page. Click on SFBlog for “static” ,meaning permanent, posts. Confused? It will make sense when you click on SFBlog at the top of the page.

Article #1:

Save or Pay Down Debt? (Kiplinger.com)
Should you be putting money in savings or investments at the same time you’re paying off a loan?

That’s one of the most frequently asked questions we get at Kiplinger, and the answer isn’t always obvious. Even if you have run up a balance on a high-rate credit card, you may hear a nagging voice in your head urging you to keep plowing money into savings for retirement, college for the kids or a new home. (More)

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Herbert L. Hartso III, MDRT Financial Planner”

Herbert L. Hartso III, MDRT  Financial Planner”

“I help people make important financial decisions by carefully looking at their personal situation and passionately presenting a clear financial plan that is in their best interests.” More info

Phone: (425) 641-8788 E-mail: hhartso@pcrg.com Executive Assistant- Kim Kopczynski

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6/23/09 Mortgage Rate Update

Current Mortgage Rates

Best Rates   Yesterday Today 30 Yr FRM 5.17% 5.19% 15 Yr FRM 4.66% 4.64% FHA 30 Year Fixed 5.19% 5.21% Jumbo 30 Year Fixed 5.44% 5.48% 5/1 Yr ARM 3.94% 3.91% May include points Updated: 6/23/09 1:32 PM

National Average Mortgage Rates   Rate Points Change 30 Yr FRM 5.38% 0.7 -0.21% 15 Yr FRM 4.89% 0.7 -0.17% 1 Yr ARM 4.95% 0.6 -0.09% 5/1 Yr ARM 4.97% 0.6 -0.20% Source: Freddie Mac Updated: 6/18/09 2:19 PM

Your Mortgage Rate and the Closing Costs Associated with It

To qualify for a par interest rate requires a FICO score of at least 740 with a loan amount to home value ratio of 80% or less. This also assumes that borrowers pay all closing costs which includes 1 origination/discount point or broker charge(how mortgage bankers and brokers earn income.  I bring up this topic due to a recent conversation I had with a reader.  This reader sent me an email indicating they had been quoted a specific zero point mortgage rate, as is the usual reaction to such a statement I requested this reader to please send me their good faith estimate.  Sure enough, there were no points; however, upon further inspection I noticed a 1.00% closing cost labeled “broker fee”(see example below). So although the “fees” were not described as “points”, this client was still paying the same amount. Consumers beware of how lenders structure your good faith estimates….more

Daily rate updates

To see most up to date mortgage rates, go to “View Categories” click on Mortgage Rate Updates.

Update 6/22/9 Mortgage Rates

Mortgage Rates 6/22/09

Best Rates   Yesterday Today 30 Yr FRM 5.19% 5.17% 15 Yr FRM 4.67% 4.66% FHA 30 Year Fixed 5.24% 5.19% Jumbo 30 Year Fixed 5.45% 5.44% 5/1 Yr ARM 3.99% 3.94% May include pointsUpdated: 6/22/09 11:59 AM

National Average Mortgage Rates   Rate Points Change 30 Yr FRM 5.38% 0.7 -0.21% 15 Yr FRM 4.89% 0.7 -0.17% 1 Yr ARM 4.95% 0.6 -0.09% 5/1 Yr ARM 4.97% 0.6 -0.20% Source: Freddie MacUpdated: 6/18/09 2:19 PM

6/22/09

Mortgage Rates 6/22/09

Best Rates   Yesterday Today 30 Yr FRM 5.19% 5.17% 15 Yr FRM 4.67% 4.66% FHA 30 Year Fixed 5.24% 5.19% Jumbo 30 Year Fixed 5.45% 5.44% 5/1 Yr ARM 3.99% 3.94% May include pointsUpdated: 6/22/09 11:59 AM

National Average Mortgage Rates   Rate Points Change 30 Yr FRM 5.38% 0.7 -0.21% 15 Yr FRM 4.89% 0.7 -0.17% 1 Yr ARM 4.95% 0.6 -0.09% 5/1 Yr ARM 4.97% 0.6 -0.20% Source: Freddie MacUpdated: 6/18/09 2:19 PM