Archive for the ‘Education’ Category

Behaviors repeated over and over become habits. When it comes to personal finance, many of our behaviors have created unhealthy habits that can lead to financial destruction. Whether it is in our own lives or in the lives of people we love and care about (i.e, children, siblings or parents) each of us has witnessed the devastating effects of over-spending, over-leveraging, and living beyond our means.

Prepare your food at home more often. Try to eat-out less often.

The typical family’s largest monthly obligation is their house payment. Today many families have become “House Poor.” This is a situation where the house payment consumes a dangerously high percentage of the household income leaving too little money left to support the family after the house obligation is met. For many other families the amount of consumer debt payments is the culprit for cash flow challenges. Both of these situations tend to cause tremendous anxiety and pain within a family. All too often the results are financial and/or relational destruction.

The first step for people in challenging financial situations is to review the habits that have led up to their current situation. Is there unnecessary spending that has developed into bad habits? Maybe there are small luxuries that can be satisfied in a more cost effective way, or given up entirely. People often discover that eating at home more often, making their own beverages or purchasing less expensive versions of products can save the money needed to live more comfortably.

Once a thorough review of monthly spending has been completed, it is time to review how the debts are structured. Often times, a simple reallocation of debt will reduce the monthly outflow to a more comfortable level. If the budget is still too tight, then it is time to consider items that can be sold or downgraded. This may be a car, boat, or more significantly a home. Given the thousands of homeowners with mortgage payments that will increase as interest rates rise, this will be the best solution for many.

As people go through the process of re-establishing financial habits, it is important to remember that the experience will be emotional. It is difficult to downgrade a lifestyle and/or give up indulgences that have been a part of everyday life. The key is to remember that the joy of feeling financially in control will significantly outweigh the pain of what will be sacrificed.

If you or someone you know is in a situation where the monthly budget has become uncomfortable, perhaps it is time for a no cost, no obligation financial “check-up”. As part of our “Wealth Care” plan my team and I help hundreds of families each year to gain control of their financial habits and re-establish new ones. As part of the process we will evaluate your cash reserves, debt, long-term savings, and equity and make recommendations on ways to improve your situation. If you are comfortable with your budget but you would like to make sure you are getting the best interest rate possible on your mortgage, call 801-501-7950 or e-mail me to see how you can benefit from the unique mortgage experience provided by my team. We look forward to welcoming you into the City Creek Family, your Wealth Care provider for life.

For the past twelve months, I have been warning my clients of potential upward movements in mortgage rates. However, despite industry predictions, several days in June of 2010 saw mortgage rates that matched the historic lows seen in 2009. For those thinking of buying or selling a home, and for the many that have not yet refinanced their home loans, this presents an unprecedented opportunity.

Mortgage rates have benefitted lately from the situation in Europe, as global investors have sought the safe haven of our US Bonds. However, as the Euro’s freefall is finally showing some signs of stabilization, traders and investors may begin to sell their US investments and move their money back into the European markets. This could reverse the trend and cause home loan rates to move higher. With that in mind, it is time to consider whether you should be making any changes to your mortgage plan.

Confused about rates? Call 801-501-7950

Should I Consider a Refinance?
Given the current state of the market, if you have a 30 year fixed rate that is higher than 5%, or a 15 year rate greater than 4.5%, there is a high probability that you can improve the cost of your home loan. Also, if you have an adjustable interest rate of any kind, it is worth considering securing a fixed rate to eliminate your interest rate exposure. With mortgage rates at historic lows, there is only room for significant changes in one direction: up.

What are the Fees to Refinance?
In most cases, the type of mortgage that I suggest to my clients considering a refinance is one that does not have fees that are charged to the homeowner. Rather than paying the fees associated with a mortgage, or adding the cost of the home loan into your principal balance, a no-fee loan has a slightly higher interest rate. This is ideal for homeowners who are not certain they will be in their home long term, or for borrowers who are likely to refinance their home again in the next 10-12 years. If the plan is to keep the home and the mortgage for at least 12 years, then I may suggest paying fees to achieve the lower rate. As part of our mortgage review process, we evaluate the options and determine which is most appropriate for our clients. A mortgage is a very personal decision. If your mortgage advisor does not fully understand your long term goals, he or she is not able to ensure the best loan strategy that will help you accomplish your plans.

What is the First Step?
My team offers a free mortgage analysis. The process begins with a fifteen minute phone call where we gather the information needed to prepare our recommendations. In many cases, we find people who are already in the best mortgage strategy available. If that is the case, we will put you on our rate watch and will continually monitor your interest rate against the market and proactively contact you if an opportunity arises to improve your situation. Regardless, every homeowner who has a mortgage should take the time to have a free evaluation to ensure their loan is properly structured. Call 801.501.7950 or email me to arrange a time that we can discuss your review.

30 year fixed rate chart

I am often asked when a homeowner should put the focus of paying off their mortgage. Although the answer to this question is specific to each homeowner, my general recommendation lies within a 4-step plan that I use to advise each of my clients.

Each step is numbered based upon the priority. In other words, step one should be on track before moving on to step two, and so on. The problem is that many homeowners jump ahead before the prior step are mastered. This typically leads to living paycheck to paycheck, getting stuck in the consumer debt rut, or reaching retirement to find that you are equity rich and cash poor. By following the steps below, you can help ensure you reach retirement having achieved the long-term goals you desire.

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I look forward to your feedback. Feel free to email me at mike@citycreekmortgage.com