Should I Refinance Now? Does A Bear Poop In The Woods?

You guys know that the one and only data point I track religiously is the 10-year yield right?  Well, after the 10 year yield dipped below 3%, I went to the bank with a buddy of mine to go see how much money we could borrow.  The wiry banker sat us down like a loving couple and asked us to go through our finances at which point I kindly stepped out of the room and let him go first.  Five minutes later, he came out with a grin on his face, so I curiously went in.

He proceeded to tell me some curious news.  “Look here Sam, you can borrow up to $1.5 million dollars at a 5 year fixed rate at 3.625%!”

Holy moly really?  You mean little old me, just like that can borrow that much money at that low of a rate?  “So what’s the catch?”, I ask.

“Zero points, and $2,500 in closing costs.  But don’t worry, we are giving you a $500 credit for being a preferred member, and frankly, if you guys both take out loans, I’ll throw in another $500 credit,” said the banker.

“Done!  Where do I sign?, I ask as I think about the new Audi R8 I plan to buy with just $150,000 of the $1.5 million.  Or maybe I should be more conservative and spend $100,000 on the new 2011 Porsche 911.  Or actually, I heard the 2011 BMW  335i coupe is coming out for only $55,000 this fall.  With all the money “saved”, time for a bachelor’s trip somewhere fun!  (I’m still thinking to myself here).

NOT SO FAST! REFINANCING SHOULD BE TO SAVE YOU MONEY

Home Mortgage Refinancing Tips For A Smarter You

Mega MansionThe beauty of an economic downturn is cheap credit.  It’s ironic, because cheap credit is one of the main causes of this collapse in the first place!  That said, for those of you with mortgage debt, now is a great time to call your local bank and check up on rates.  Refinancing can be a daunting process, but it shouldn’t be with the right representative and proper frame of mind.

I recently refinanced one of my rental properties and now is a good time to share with you some key things to think about and assess.  Hopefully by the end of this article you will be able to make an informed decision and save lots of money as a result!

INFLATION

Knowing when to refinance is like being a bond trader.  Bond traders obsess over inflation assumptions, and you should have at least a basic assumption as well.  Clearly, there has been tremendous monetary expansion recently, which should ultimately lead to higher inflation.  Basic economic theory says that for every new $1 dollar bill printed, there will be a $1 increase in prices in the overall basket of goods eventually.  The key word is eventually, which could be decades away.

People have been waiting for higher inflation, and therefore higher rates for the past decade.  Ironically, those with short-term fixed mortgages (ARMs) are this century’s winners, because rates are resetting at equal to lower levels than when they were originally fixed!

Inflation has been coming down now for over 25 years, and I see little reason to expect inflation to suddenly jump higher given the tremendous output gap in the economy.  If inflation does start rising, at least you know that your assets are by definition also rising in nominal value.

The figure to watch is the 10-year US treasury yield.  Currently at 3.4% 2%  2.7% (as of 4/26/14) the yield is hovering close to the lows of the past decade.  Meanwhile spreads between treasury yields and bank mortgage rates have narrowed since the crisis.  Most long term duration mortgages are related to the 10-yr bond yield, hence whenever you see the stock market crashing,watch bond prices rise, and yields fall.  This is the exact time to call your mortgage broker.

DURATION

Where Americans Pay The Most To Live And Why

Samurai On Waialae Beach At Sunset

As one can guess, higher paying jobs leads to higher costs of living.  In fact, more than half of the 20 cities surveyed by the US Census Bureau are based in Caleeforneea, as Governor Arnold would say.

How is it that California is so dominant in the expensive category, when the mass of settlers first arrived on Plymouth Rock 300 years ago?  3,300 miles is a long way to travel, especially on horse and foot!  The main reason for the unfettered move out west is simply warmth and sunshine!

Every time I vacation in Hawaii, I always ask myself, why the heck ain’t I here for good.  Let’s face it, more sunshine equals happier people.  Sunshine is the classic zeitgeber to help us wake up and get us motoring in the morning.  No sunshine leads to no photosynthesis, which means no plant life, and therefore no ecosystem.

After 10 years of living on the east coast, I can still feel the grey skies weigh down my soul every winter.  Don’t get me wrong.  I love the winter snow during the holidays, but I just love being in a cheerful mood more.  Here are America’s most expensive places to live based off median monthly housing costs.

TOP CITIES WHERE AMERICANS PAY THE MOST TO LIVE

Book Review & Giveaway: The New Rules For Mortgages

41rpgJfrwQL._SS500_“The New Rules For Mortgages” by Dale Siegel provides a fantastic understanding of everything you need to know about mortgages.  For many, a home is the single biggest purchase of their lives, and the mortgage is a necessary instrument for making homeownership dreams a reality.

Qualifying for a mortgage is daunting, but it doesn’t have to be under Dale Siegel’s guidance.  After all, who’s better to give instructions than the president of her own mortgage company?  It’s important to highlight that Dale truly tries to provide readers knowledge about mortgages and doesn’t use her book as a sounding board for her company.  The book is like a secret weapon for first time home-buyers who dare tip-toe past enemy landmines.  The enemy is the industry which has adeptly blown off many appendages via exotic liar loans and oh-too-high fees.

How To Lower Your Property Taxes – Adventures In Assessor Land

FACT: The goal of local governments is to get every single penny in tax revenue from you! When I got my property tax bill in 2009, I was astonished to see that the City is taxing my primary residence based off an assessed value 7% HIGHER than in Armageddon 2008!  In the biggest economic downturn ever, the San Francisco assessors office believes my property actually increased?!  What a sham!

Like clock work, assessed values increase 2-3% higher every year, regardless of the economic environment.  It’s as if the City is punishing me for succeeding to lower my assessed value last year by 3%.  Too bad for the city, because they are messing with the WRONG person.  The tax collectors office counts on citizens to roll over and listen to their every whim, but not me, and certainly not you!

I want to share some tips on how you too can fight against the machine.

5 STEPS TO REDUCE YOUR PROPERTY TAX