financial

Apache is functioning normally

I know I’m taking a risk by starting an article by defining a term from economics. But please, stick with me. It’s not a hard concept to understand, and it directly relates to your financial success.

Utility is a term used in economics to describe how much value or happiness one derives from a good or service. Marginal utility refers to how much additional value/happiness is derived from one additional unit of the good or service. Most goods and services are said to have “decreasing marginal utility.”

“Decreasing marginal utility” sounds like gibberish, but it’s actually pretty easy to understand:

  • First slice of apple pie: “Yes, please!”
  • Second slice of apple pie: “Well…OK…one more piece.”
  • Third slice: “Oh, I couldn’t. I’m stuffed.”

Each slice of pie provides less happiness (“utility”) than the previous slice. The same thing holds true with nearly every good or service.

In fact (or perhaps, as a result), this idea holds true for money as well. For many of us, an extra $500,000 in cash could accurately be described as life changing. But what if you already had a liquid net worth of several million dollars? An extra $500k would still be nice, but I doubt it would change your life meaningfully.

Get Rich Slowly has practically been a real-time case study in this concept. J.D. used to be deeply in debt, at which point he had a high marginal utility of wealth. That is, every extra dollar he earned and saved made a big difference to his well-being.

However, as he climbed out of debt, built his income, and built his wealth, his marginal utility of wealth has slowly declined. J.D. recently put it this way:

“Debt used to be my biggest source of money stress. Then it became an obsession with frugality, which led me to cross the line to cheap bastard. Now my biggest problem seems to be an obsession with income: I want more money all the time. I’m beginning to see, however, that if I relax on my drive for a higher income, I can have more of other stuff, like time with friends — and travel.”

Marginal Utility and Risk Aversion

Because most us have a decreasing marginal utility of wealth, a loss of a given amount has a greater impact than a gain of the same amount. For example, would you be willing to accept a wager of $10,000 on a coin flip? If you win, you get $10,000 — but if you lose, you owe me $10,000?

I sure as heck wouldn’t take that bet.

The idea of winning $10,000 is exciting, but the idea of losing $10,000 in an instant is downright sickening. Fifty-fifty odds just aren’t good enough to get most people to put a meaningful amount of money at risk.

In economic jargon, we say that we’re “risk averse”. That is, we’re unwilling to take a risk unless the probability is good that we’ll come out ahead as a result of taking that risk.

Eliminating Risk Where Possible

If you’re like most people, you’re more afraid of running out of money than you are excited about being filthy rich. And if that’s the case, why not eliminate as much risk in your investment portfolio as you possibly can?

For example, have you checked to see if you’re saving enough each year to meet your goals by investing entirely in TIPS? (TIPS — Treasury Inflation-Protected Securities — are bonds that provide protection against inflation.) If so, why take on stock market risk? With TIPS, you know exactly what inflation-adjusted return you’ll be getting. It’s hard to have less risk than that!

Or, if the modest return from TIPS isn’t going to be enough to meet your goals — and you therefore need the higher expected return that comes with stocks — why not try to make the stock portion of your portfolio as safe as possible? For example, if you’re saving enough each year to get the job done with index funds, why take on the additional risk that comes with picking individual stocks?

Alternatively, if you’re in (or near) retirement and you’re worried that you’re going to outlast your portfolio, why not minimize that risk by purchasing an annuity that can provide predictable income for the rest of your life?

When it comes to investing, rather than asking how much risk you can stomach, try asking how little risk you can get away with. After all, is it worth jeopardizing your goals for a shot at that third slice of pie?

Source: getrichslowly.org

Apache is functioning normally

Apache is functioning normally

Today we’ll take a close look at “Castle & Cooke Mortgage,” an independent mortgage lender with a sizable presence in the Southwestern United States.

They’re a retail, direct-to-consumer lender that has been around for about 15 years, yet they still mustered nearly $1.5 billion in total production last year.

The company is located just south of Salt Lake City in Draper, Utah, the state where they do most of their business.

They’re also quite active in nearby Nevada, so if you live in either state, you may have come across them. Let’s learn more.

Castle & Cooke Mortgage Fast Facts

  • Retail direct-to-consumer mortgage lender
  • Founded in 2005, headquartered in Draper, Utah
  • Offers home purchase financing and refinance loans
  • Funded nearly $1.5 billion in home loans during 2019
  • Licensed in 37 states and the District of Columbia
  • Most of their volume came from the states of Utah and Nevada

As noted, they’re quite active in the Southwestern United States, namely in Utah and Nevada. They also did a large amount of lending in Arizona, California, and Texas.

However, they are licensed in 37 states and the District of Columbia, so you can work with them if you live in most states nationwide.

At the moment, Castle & Cooke Mortgage is licensed in the following states: AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, MD, MI, MN, MO, MS, NE, NV, NM, NC, ND, OH, OK, OR, RI, SC, TN, TX, UT, WA, WI and WY.

They also have physical branches in Arizona, California, Colorado, Florida, Hawaii, Idaho, Iowa, Nebraska, Nevada, New Mexico, Tennessee, Texas, and Utah.

Last year, they did about $1.3 billion in total loan origination volume, with about two-thirds of that home purchase lending. The rest was made up of mortgage refinances.

About half of their volume consisted of conventional loans, with another third FHA loans and the rest mixed between jumbo loans, VA loans, USDA loans, and so forth.

How to Apply for a Home Loan with Castle & Cooke Mortgage

  • You can apply directly from their website or free smartphone app
  • Get started by browsing the loan officer directory on their website
  • Or you can call/visit a brick-and-mortar branch if one is located near you
  • They offer a digital home loan process from start to finish

You can apply for a home loan directly from the Castle & Cooke Mortgage website, or download their free smartphone app and get started that way as well.

First, use the branch directory on their website to find the one nearest you, then click on “Loan Officers” to see who works there.

You can read their bios, or alternatively just choose one if you’ve been referred or know who you’d like to work with.

Once on a loan officer’s personal webpage, you’ll be able to start the mortgage application or pre-qualification process.

They offer a digital mortgage loan process that allows you to complete most paperwork electronically, including the ability to eSign documents.

You can also scan and upload paperwork, link financial accounts, and receive updates as you go. whenever you need help, there’s an option to message your loan officer instantly.

Simply put, they make it easy to apply and track loan progress along the way, from start to finish.

Loan Types Offered by Castle & Cooke Mortgage

  • Home purchase financing, refinance loans, and renovation loans
  • Conventional loans backed by Fannie Mae and Freddie Mac
  • Government-backed home loans: FHA, USDA, and VA
  • Jumbo home loans up to $3 million loan amounts
  • Mortgages for self-employed borrowers
  • First-time home buyer programs and down payment assistance
  • HUD Good Neighbor Next Door (GNND) program
  • Condotel loans and other niche products available
  • Fixed-rate and adjustable-rate mortgage options
  • Available on primary, secondary homes, and investment properties

Castle & Cooke Mortgage Rates

You won’t find mortgage rates listed on the Castle & Cooke Mortgage website. This doesn’t mean they’re good, bad, or just plain average.

Many lenders choose not to publicize their mortgage rates for one reason or another, and Castle & Cooke Mortgage is one of those lenders.

So in order to get pricing and compare rates, you’ll need to get in touch with a loan officer first.

The same is true of their lender fees, which they don’t seem to disclose on their website.

If and when you obtain pricing, be sure to inquire about any fees they charge, such as an application fee or loan origination fee.

Also take the time to compare their rates and fees to other lenders to see where they stand. While pricing isn’t everything, it’s certainly a deciding factor for many homeowners.

Castle & Cooke Mortgage Reviews

On SocialSurvey, they have a 4.93 rating out of 5 based on more than 8,000 reviews from past customers. That’s an excellent rating, especially given the number of reviews.

Over at Zillow, they have a 4.98-star rating out of 5 based on nearly 300 customer reviews. That’s near perfection and a truly impressive rating.

You can also see individual loan officer reviews both on the Castle & Cooke website (on each loan officer’s webpage) and on Zillow. Be sure to fine-tune to if you want to work with the

One slight negative is the fact that they have a ‘C’ rating with the Better Business Bureau at the moment, which is based on complaint history. Hopefully that improves soon.

They also aren’t accredited with the BBB, not that it equates to a company being good or bad necessarily.

In summary, Castle & Cooke offers a good mix of home loan programs and a variety of convenient ways to apply for a mortgage.

That, coupled with their excellent customer reviews, could make them a good choice for your mortgage needs if offered in your state.

Castle & Cooke Mortgage Pros and Cons

The Pros

  • Can apply for a mortgage directly from their website
  • Also have brick-and-mortar branches in 13 states
  • Lots of loan programs to choose from including jumbos
  • Excellent customer reviews
  • Free smartphone mortgage app
  • Free mortgage calculators and mortgage glossary on-site

The Cons

  • Not licensed in all states
  • Do not disclose mortgage rates or lender fees on website
  • Currently have a ‘C’ rating with the BBB
  • May transfer your mortgage to a third-party loan servicer

(photo: James Petts)

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

Last week, the U.S. House of Representatives passed the “Middle Class Borrower Protection Act of 2023,” legislation sponsored by Rep. Warren Davidson (R-Ohio) that was designed to cancel controversial changes to loan-level pricing adjustments (LLPA). The LLPA changes were announced earlier this year by the Federal Housing Finance Agency (FHFA).

The measure — which recently earned the support of the National Association of Mortgage Brokers (NAMB) — passed on a vote of 230-189, with the House Republican conference voting unanimously in its favor. Fourteen Democrats crossed party lines to join Republicans, according to the office of the U.S. House’s clerk.

“The Biden administration wants to use mortgage fees to put their finger on the scale and decide who gets to pay more and who gets to pay less,” House Financial Services Committee Chairman Patrick McHenry (R-N.C.) said in a statement. “This will make housing less affordable, not more, and puts taxpayers at risk by threatening the safety and soundness of our housing finance system.”

Nearly 95% of Americans have credit scores above 680, and the group could face an extra $1.8 billion in new fees over the next two years under the LLPA plan, according to McHenry.

“House Republicans are taking action to protect middle-class borrowers with Rep. Davidson’s bill and I was proud to support it on the House floor,” McHenry said.

“The Biden administration’s mortgage rule is a socialist redistribution of wealth. I’m glad to see my colleagues recognize this issue and pass my legislation to reverse this rule,” Davidson added.

The proposed LLPA changes caused uproar when announced earlier this year. The main issue stemmed from the belief that the changes would punish borrowers with good credit, which FHFA Director Sandra Thompson later characterized as a misconception.

The changes were ultimately rescinded, but not before House Republican lawmakers took aim in a House Financial Services subcommittee hearing and an additional hearing with Thompson as a witness.

“I want to be very clear on one key point, and one that bears repeating: under the new pricing framework, borrowers with strong credit profiles are not being penalized to benefit borrowers with weaker credit profiles,” Thompson said during the hearing. “That is simply not true.”

According to the entry on the U.S. Congress website, the bill has yet to be introduced in the U.S. Senate. It’s unclear if the bill will make it to the floor of that chamber, where the legislative agenda is controlled by a Democratic majority.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

Just about everyone who owns a home in this country is hanging on to it. The number of existing homes, as opposed to newly built, that sold in May was 20% lower than a year earlier. That’s according to data released Thursday by the National Association of Realtors.

Even if people want to move, many who bought or refinanced a couple of years back are loath to give up a 3% interest rate on their mortgage, especially if it means buying a new house at a rate well above 6%.

In Kate Sam’s household, sleepovers are not really doable. 

Kate Sam’s home in Baltimore, which turns 100 years old next year. (Courtesy Sam)

“You can hear everything from anywhere,” Sam said.

She has two kids, ages 4 and 8. And she’d like to sell their small house in Baltimore to buy a bigger place so they could host sleepovers.

But Sam and her husband refinanced their mortgage in 2021 at a rate of 3%. And now, “it’s just unimaginable to give up the current cost,” she said.

Lots of people are choosing to stay put even if they’d rather sell. Lawrence Yun, chief economist with the National Association of Realtors, said he expects there to be fewer divorces (!) this year.

“The couple may not like each other, but they love their 3% mortgage rate, so they don’t want to give that up, Yun said. 

Others may avoid taking new jobs if it means relocating, he added.

But certain life changes might cause people to make a move — even at those higher rates. Like having a third child when you live in a two-bedroom condo.

“At some point, the financial benefit of staying in the same space loses its luster, so to speak,” said Jonathan Miller, who leads Miller Samuel, a real estate appraisal and consulting firm in New York.

Others want less space and a different layout, said Mark Goldman, a loan officer with C2 Financial Corp., a mortgage brokerage.

“A lot of people, when they age, they want a bedroom on the first floor. They don’t want to be dealing with stairs,” Goldman said.

And then, there are sales in which the homeowner won’t need to buy a new place.

“What I’ve been suggesting to my real estate agents is — watch the obituaries. You know, a lot of times when somebody passes away, the kids don’t want the house, they want the cash,” Goldman said.

And if rates do eventually go down, say, back into the 5% range, Miller expects all those people who’ve been holding out to put up a For Sale sign so they can finally get divorced … or host that sleepover. 

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Apache is functioning normally

Apache is functioning normally

This is a guest post from Sierra Black, a long-time GRS reader. She writes about frugality, sustainable living, and getting her kids to eat kale at Childwild.com.

When my husband and I first got married, we bought a house in the suburbs and promptly had a baby. Buying that house meant buying a piece of the American Dream — but we both figured out pretty quickly that it wasn’t our dream.

I will never forget coming home from the hospital with that precious little girl and looking around my huge suburban home with a sense of confused dread. “What happened to my apartment?” I said. “What happened to my life?”

Big problems
I stayed home with our baby for a year, living on savings, and then went back to work full time. The baby went to daycare for ten hours a day, and most of my salary went there with her.

I was driving 40 miles north every day to work at a newspaper, while my husband drove 40 miles south to his research job at a major university. He’d leave the house at 8 a.m. and often come home after midnight. On a “good day” he could get home for dinner with me around 8 p.m.

Meanwhile, I’d come home exhausted with a cranky kid, only to have my boss call during our late dinner to tell me that something on my beat was on fire (sometimes literally) and I had to go cover it. On the weekends, instead of hanging out with friends or having adventures, we got to mow our lawn, clean the ten rooms of our lovely home and try to balance our finances.

We were exhausted, miserable, lonely and broke.

We lived like this for two years, and then things started to fall apart. First I left my job to have a second child. Having become a stay-at-home mom, I was starting to get serious about cutting the fat from our budget. I started with the small things:

  • canceling our Netflix subscriptions
  • scaling back on dining out
  • buying store brand groceries

It felt like I was bailing out a leaky boat with a teaspoon. Something bigger would have to change.

Big decisions
We started talking seriously about moving. The housing market was starting to head south, but an opportunity popped up to buy a house near his office from a friend who’d moved to California.

We decided to go for it.

The move has saved us over $1000 a month. We sold one of our cars, and drive the other one only about 10% of what we used to. Our mortgage is slightly lower, and since the new place is a little smaller, the utility bills are less. It’s also much easier to clean than the huge, drafty house we had before.

We save money in less tangible ways too. We live in a vibrant neighborhood now, where people create and share a lot of community resources. We’re able to barter or swap for everything from clothing to childcare to soup, something we could never do in our sterile suburban neighborhood. This network of community resources saves us at least $200 a month.

Even more precious than money, this move saved us time. My husband spends more time with his children now. He walks to work, and comes home every day for lunch with the family. The reduction in our expenses also bought us the ability to live on one income indefinitely, giving me the gift of time with our girls. That in turn allowed us to choose homeschooling for our children.

Our financial picture is far from perfect. We still have large debts, and I pinch pennies to afford small treats like a paperback book or an ice cream outing. But for the first time, I have a clear plan to achieve our financial goals. I’m seeing our debt go down every month while our savings go up. And I’m enjoying every day of it as I get more time with my family, and spend less time maintaining a suburban home and lifestyle.

Big returns
Moving is not for everyone. Many people love their homes and make huge sacrifices to stay in them. But if you’re trying to get your finances under control, I encourage you to look at your life and consider the big stuff as well as the small.

Making big changes is difficult. Staging our house for sale, selling it in a down market and then moving with two small kids was a series of daunting, painful tasks. The move was financially counter-intuitive: we sold our house at a loss and took on new debt to pay for our moving costs. But the rewards matched the effort. We’re getting a huge return on the investment we made in this change, one that far outpaces the savings we saw from cutting every magazine subscription we had.

Just in case you’re inspired to follow my particular example, here’s a recent guide to how to downsize your home.

J.D.’s note: Sierra’s experience reminds me of the advice that Elizabeth Warren gives in her book, All Your Worth. She urges readers to get the big stuff right so that the little stuff matters less.

Source: getrichslowly.org

Apache is functioning normally

Recent statistics state that roughly 42 million American act as unpaid caregivers.

A recent article cited AARP Public Policy Institute as saying that more than one in eight state residents were providing care to an adult with limitations in his or her activities at any given point in 2009.

People drastically change their lives to accommodate adults who need serious care, often tapping into their own savings and sacrificing time and sometimes even their jobs to be able to help family members in need.

Of course, most do it out of love, but the toll of being a caregiver is tangible.  Caregivers can easily spend tens of thousands of dollars every year caring for a loved one.

Doctor’s bills, treatments, special equipment, and more. All of these things add up to a massive bill.  A life insurance policy with a long term care rider can help.

Insurance as a Safeguard

Those with enough foresight to plan for old age and retirement often purchase long-term care insurance, as other forms of payment (self-funding, Medicare and Medicaid) are often prohibitive. If goes without saying that self-funding can quickly eat away at savings, Medicare comes with many restrictions and caveats, and Medicaid is for the indigent.

But many prospective buyers of long-term care insurance were reluctant to spend money on coverage they might not use. As a response, some insurance companies developed insurance products that combined long-term care benefits and life insurance. These linked products can benefit boomers looking to safeguard their savings against the risk of long-term care expenses.

Essentially, how these products work is that they offer your beneficiaries life insurance coverage just like a typical life insurance policy.  The added benefit is that if you were to need long term care coverage, there would be a benefit that would kick in to help pay.

The benefit is dependent on how much premium you paid up front in addition to your age. Your life insurance death benefit would then be reduced based on how much money you used for long term care coverage.

Is Combination Insurance Right for You?

Obviously, everyone’s situation is different and insurance needs to be considered based on an individual’s needs. Often, combination policies offer enough benefits to give you about 2-3 years of long-term care. But if you need more than a specific period of care, that might not be enough. On the other hand, if you don’t need the long-term care then your heirs would benefit.

You never know what the future is going to hold. While none of us plan to need long-term care, the older we get, the more likely that our health is going to decline to the point that we need extra assistance.

Long-term care can be any additional personal assistance that is needed to maintain quality of life as we age. This could be either in a nursing home or in-home care.

While most people associate long-term care with a nursing home or assisted living facility, a little over half of all care is given in the patient’s home.A lot of people think that either Medicare or health care will pay for their long-term care expenses. Almost no health insurance plan will pay for any part of long-term care.

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Medicare on the other hand, will only pay for up to 100 days of care, after you’ve been admitted to the hospital for three days. There are also several rules and exemptions for Medicare that can quickly become confusing and leave you with massive bills that you have to pay for.

While it’s nice to have the Medicare coverage, most patients need more than 100 days, and the bills can quickly add up after that. The majority of life insurance agencies have long-term riders that you can add on to a policy. Other companies offer stand-alone policies that you can purchase if you’re worried about having to pay for long-term care.

Another option for paying for long-term care with your life insurance is including an Accelerated Death Benefits feature. This will allow you to get an advance on your insurance benefit tax-free.

These are different from long-term care insurance because you’ll actually be receiving the payout from the insurance policy. With an accelerated death benefits addition, you may have to pay more in monthly premiums, but it’s a great way to utilize your life insurance policy to pay for long-term care.

While there are different accelerated death benefit plans, most of the will allow you to get an advance on the cash if you need long-term care. They will also allow a cash advance if you need to pay for a nursing home or have a life-threatening disease.

Long-term care is expensive. A nursing home can cost as much as $230 per day, equally almost $7,000 every month. That can be a difficult bill for your loved ones to pay for. Instead of carrying the financial strain, or relying on your family to shoulder the bill, there are several ways that you can cover the costs of long-term care without banking your bank.

Before considering any life insurance policy it’s important to get an understanding of what stand-alone policies vs combination policies can do for you. Look at your assets and budget accordingly. Speak with loved ones about your needs, and then when you’re ready, always consult with a qualified adviser.

Source: goodfinancialcents.com

Apache is functioning normally

Apache is functioning normally

Mortgage financier Fannie Mae announced several changes last week that will make it more difficult for borrowers to take out interest-only loans and adjustable-rate mortgages.

Beginning in July, the qualifying rate on adjustable-rate mortgages with an initial fixed-rate period of five years of less will be the greater of the note rate plus 2%, or the fully indexed rate.

Essentially, borrowers won’t be able to use the interest-only rate they actually pay as the qualifying rate, making it more difficult to meet debt-to-income ratio requirements.

The move is intended to lessen the impact of payment shock, which has troubled borrowers unable to refinance after their ARMs went adjustable, mainly due to negative equity issues.

Fannie is also upping requirements for interest-only loans, calling for a minimum Fico score of 720 and 24 months of asset reserves.

Additionally, interest-only loans are no longer eligible for cash-out refinances, investment properties, 2-4 unit properties, and several other programs.

“With these changes, Fannie Mae has structured the interest-only option for borrowers who are in a position to choose it as a financial management tool, rather than as an affordability tool,” the company said in a lender letter.

“Borrower qualification is based on the borrower’s ability to sustain mortgage  payments subsequent to the initial interest-only period.”

When home prices were at their peak, an interest-only option was a necessity for many to simply get in the door…

Source: thetruthaboutmortgage.com