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- First Republic is teetering, with the stock down 93% in 2023 and the bank exploring strategic options.
- The bank won wealthy clients with the offer of jumbo mortgage loans that required no principal payments for a decade.
- The bank is now reversing course as it fights for survival.
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Higher mortgage rates are likely in the cards
The Federal Reserve is set to have its third meeting of the year next week, and for hopeful mortgage borrowers, it’s probably not good news.
Given the nation’s skyrocketing inflation rate (the highest since the early 1980s), plus recent commentary from Fed Chair Jerome Powell, higher mortgage rates are almost guaranteed in the days and weeks following the bank’s May 3-4 meeting.
It will only add insult to injury in an already affordability-challenged housing market. Home prices are up 19% over the year, according to the Federal Housing Finance Agency, and last week’s average 30-year mortgage rate? That clocked in at 5.11% — a whopping 200-basis-point uptick since the start of the year.
For homebuyers and borrowers mulling a refinance, it signals one thing: Act now or pay more.
Click here to check today’s VA rates (Apr 27th, 2023)
What the Fed has planned for May
The Federal Reserve has already indicated it plans to tighten monetary policy as the year goes on. The bank increased the federal funds rate for the first time in six years at its March meeting, and Powell has indicated it will do so again at next week’s gathering too.
Only this time? Powell says a 50-basis-point hike is possible — double what was seen back in March.
“If you look at the last tightening cycle, which was a two-year string of 25-basis-point hikes from 2004 to 2006, inflation was a little over 3%,” Powell said last week at an International Monetary Fund meeting. “Inflation is much higher now, and our policy rate is still more accommodative than it was then. So it is appropriate, in my view, to be moving a little more quickly. That points in the direction of 50 basis points being on the table.”
To be clear: Inflation isn’t just “much higher” than the last time around — it’s significantly higher. Earlier this month, inflation came in at 8.5%, the highest point since 1981. So Powell’s hint at a more aggressive rate hike is probably more than just speculation. In fact, according to CME Group, there’s a 96.5% chance that the federal fund’s target rate will jump 50 basis points next week, putting it at 75 to 100 for the first time since pre-pandemic days.
How mortgage rates respond to Fed actions
To be clear: The Federal Reserve doesn’t dictate mortgage rates, but when it tightens policy, interest rates on loans and mortgages tend to rise.
Just take March’s Fed meeting as a case in point: After the bank raised the federal funds rate for the first time in years, mortgage rates surged. Rates on 30-year loans went from 3.85% prior to the meeting, jumped to 4.16% the week after, and have climbed steadily ever since. They’re now at 5.11%, 126 basis points higher than before the meeting.
Most experts predict mortgage rates will continue their upward climb on the backs of another Fed rate hike but just how far they’ll go is uncertain. One thing that’s for sure? Borrowers likely won’t see lower rates for some time (at least until inflation is under control).
Move quickly or adjust accordingly
If you’re eyeing a refinance or home purchase, your best bet is to lock in a rate quickly. Once the Fed announces its official actions next week, there’s no telling how high rates could climb in the weeks following.
If acting now just isn’t possible, you’ll want to adjust your expectations accordingly. Prepare for a higher monthly payment or reduced refi savings, and think about alternative loan options, like ARMs, which offer lower rates at the outset of the loan.
And if you’re still looking for a property, reduce your price range to ensure you stay on budget. You can also consider smaller properties or townhomes or expand your search into more affordable, rural communities. Both steps can help you offset the added costs that higher rates will come with.
Click here to check today’s VA rates (Apr 27th, 2023)
Source: militaryvaloan.com
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Your monthly car payment might be your biggest automotive expense, but it’s not the only one. Insurance, repairs and fuel can add up to hundreds of dollars per month, depending on your situation. These ownership costs are sticky — you’ll keep paying them even after you make your last car payment, or if you buy your car with cash.
Car prices
The average sale price for an electric car was $58,385 in February 2023, according to Kelley Blue Book. That’s about $13,000 more expensive than the average gas-powered, new non-luxury vehicle.
Lower-cost EV options do exist: There are a couple available with a range of at least 200 miles for less than $30,000 and a few more for less than $40,000. EV tax credits can bring your total costs down — if you and your car qualify. These tax credits even apply to used EVs that meet similar qualifications.
If you plan to purchase your EV with financing, check whether you qualify with lenders who offer loans tailored for EVs. These loans can come with rate discounts and additional features, like financing for a home charger, though an applicant may find a better rate elsewhere.
Charging costs
Most people can probably save money on fuel costs compared to gas-powered vehicles. To maximize your savings, you should:
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Charge at home instead of at a public charging station.
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Check the rate schedule from your electric company and charge only at off-peak hours.
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See whether a place you shop or your workplace offers free or discounted charging options.
For example, adding 200 miles of range to a Tesla Model 3 costs $7.50 using the charger that comes with the vehicle, assuming the national average of 15 cents per kilowatt-hour for residential locations. The ultimate cost to charge your EV depends on factors including the type of car you drive and your electric rates.
At-home charging
Unless you have access to free charging, the cheapest charge you’ll find is at home. You can plug into a regular outlet using a Level 1 charger, but that only adds about 5 miles of range per hour. Plus, you’ll probably be plugged in constantly when you’re home, which means charging during peak rates.
The U.S. Department of Energy says installing a Level 2 charger at home can cost between $2,000 and $5,000. Your total could be lower if, for example, your home’s electric panel doesn’t need upgrading and if access to your changing location is straightforward. State and local incentives can also bring this figure down.
In some cases, new cars come with Level 2 chargers included, and some even include free installation.
Public chargers
If you’re traveling long distances, you’ll almost certainly want to use a public charger. Charging from almost empty to full can take eight hours at home. With a Level 3/DC fast charger at a charging station — the fastest EV charger — it could take 30 minutes.
That’s still much slower than filling up with gas, however. Using that time to eat a meal, for example, is one way to avoid sitting around. But charging stations aren’t always adjacent to amenities.
🤓Nerdy Tip
When mapping a long-distance route, use an EV-specific mapping service, like EV Navigation. These services can create routes that take into account your car’s range and any amenities you’d like when you stop to charge.
Charging on the road is also more expensive than charging at home, though possibly still cheaper than gas. For example, adding 200 miles of range to a Tesla Model 3 at a price of 40 cents per kWh would cost $20.
You can also find Level 2 chargers that are available for public use. Although slower than Level 3/DC fast charging, these make up the majority of public chargers. Level 3/DC chargers tend to cluster around interstate exits. In contrast, you can find Level 2 chargers in a variety of public places, including restaurants, hotels and parking garages. It’s an easy way to add a few miles if your car is parked for a few hours anyway.
Maintenance
Electric vehicles generally have lower maintenance costs than gas-powered cars. Without an engine, there are fewer parts that can break. You can also say goodbye to oil changes, and your brakes should last longer. A 2020 Consumer Reports study estimates the average EV’s maintenance and repair costs to be 3 cents per mile driven over the course of its lifetime — half the cost of the gas-powered vehicle average. New EVs, which need less maintenance, are cheaper to maintain, at 1 cent per mile driven on average.
There are also downsides. Some EV owners report tires wear out quickly, possibly due to the battery’s weight. Some people worry about the cost of a new battery. True, it’s expensive if you need to replace it, but that worry might be overblown. Batteries are typically covered by warranty for eight years or 100,000 miles of use and will likely last much longer. The battery issue that might be more concerning is that maximum range typically declines with use, even if you follow care instructions perfectly — just like the battery on your phone.
Taxes and registration
Taxes are unavoidable for car purchases — whether gas or electric, used or new — unless you live in Alaska, Delaware, Montana, New Hampshire or Oregon.
Taxes might be familiar, but there could also be additional fees when you register the vehicle in your state. Thirty-two states now have EV-specific fees to offset reduced gas-tax revenues, according to the National Conference of State Legislatures. These fees, which are between $50 and $200, fund transportation projects, including, in some states, charging infrastructure.
Insurance for EVs might be more expensive than for gas-powered cars. Higher vehicle costs and complex equipment that lead to expensive repairs are the culprits, according to the auto insurer Progressive. State Farm’s website states that potential damage to the battery, even in otherwise minor collisions, can be costly, and there are fewer technicians trained to repair them.
Source: nerdwallet.com
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VA loans present an incredible opportunity to eligible active duty service members, veterans, reservists and qualifying surviving spouses. But if you live in an expensive area or need a bigger loan, a regular VA loan might not be enough. Luckily, a VA jumbo loan is an option.
Here’s what you need to know about this mortgage type.
See if you’re eligible for a VA home loan (Apr 27th, 2023)
What is a VA jumbo loan?
A VA loan is considered a jumbo loan if it exceeds the conforming loan limits for your county. Technically, there is no maximum VA loan amount. But the loan cannot exceed the appraised value of the home.
What is VA Entitlement?
Essentially, VA entitlement is the amount that the Department of Veterans Affairs will guarantee for a lender. So, if you default on the loan, your VA entitlement is the maximum amount that the VA would repay your lender.
You will have a full entitlement if this is your first time using a VA loan. Another way to get full entitlement is to pay off a previous VA loan in full and sell the property. If you have a full entitlement, the VA will guarantee up to 25% of the loan amount. Importantly, you can only have your full entitlement restored once.
But if you previously purchased a house with the VA loan and haven’t paid off the loan, you may only have a partial entitlement left. With a partial entitlement, otherwise known as an impacted entitlement, you may still qualify for a jumbo loan. But you’ll have to make a down payment if you exceed your entitlement.
See if you’re eligible for a VA home loan (Apr 27th, 2023)
VA loan limits & VA jumbo loan limits
As a homebuyer, knowing the limits of a loan type are important.
When it comes to government-backed VA loans, most homebuyers don’t have a limit. As of 2020, the Department of Veterans Affairs announced changes to the loan program. These changes included that it would guarantee the same percentage of the loan amount for lenders without regard to the loan amount.
Of course, this generous guarantee is only available if your full entitlement is intact.
If you have a partial entitlement, the numbers change a bit. You’ll run into a loan maximum that is impacted based on your down payment. Essentially, you’ll multiply your remaining entitlement by 4 to arrive at your maximum loan amount. But if you are making a down payment, you can add that to your remaining entitlement and multiple it by 4 to arrive at your maximum guarantee available through the VA.
What qualifies as a VA jumbo loan?
A VA mortgage loan is considered a jumbo loan when the amount exceeds the conforming loan limits. Although these limits vary by county, the range is from $647,200 to $970,800 for single-family homes. You can find the conforming loan limits through this convenient map provided by the Federal Housing Finance Agency.
But just because the VA is offering to guarantee this amount, it doesn’t mean that you’ll find a lender willing to approve you for a jumbo loan. With this in mind, you won’t run into a loan ceiling set by the VA. But you will run into a loan limit based on your qualifications.
VA jumbo loan requirements
A VA jumbo loan might be an option for you. The requirements to qualify for this large loan will vary based on the lender.
Is a down payment required for a VA jumbo loan?
For those with full entitlement, the loan can exceed the conforming loan limit for your county. With that, you would have access to a VA jumbo loan. You may not even need to make a down payment.
If you have a partial entitlement, you could still qualify for a jumbo loan. But you may need to make a bigger down payment because you’ll likely exceed your entitlement.
Ultimately, the lender will determine whether or not you need to make a down payment on a VA jumbo loan. For example, a lender may offer a loan of $1.5 million without a down payment to a borrower with a high credit score. But the same lender may require a down payment of 10% on a $2 million loan.
When considering a VA jumbo loan, it is critical to shop around. The right lender will be able to provide the ideal loan for your situation.
Requirements to qualify
The requirements for a jumbo VA loan vary based on the lender.
In general, you can expect more stringent requirements than you would find with a regular VA loan.
Most lenders will want borrowers to have a credit score of at least 620. Plus, you may need to have some cash reserves on hand to qualify for this loan.
VA jumbo loan rates
Typically, VA jumbo loan rates are similar to regular VA mortgage rates. The exact fixed rate you see will vary based on the lender and your loan qualifications.
The good news is your VA jumbo loan rates should be lower than they would be for a traditional jumbo loan. Low rates are just one of the many VA loan benefits available for those with the appropriate military service.
VA jumbo loan funding fees
As with all VA loans, you’ll have to pay a funding fee for the jumbo option.
The VA loan funding fee ranges from 0.50% to 3.6% of the purchase price in 2022. The exact fee will vary based on your loan purpose, which can include purchase, refinance (IRRRL), or cash-out refinance. Additionally, any previous usage of the VA loan can impact your fee.
Although there is a funding fee, you won’t have to pay PMI. With that, your monthly mortgage payment won’t have that added cost.
Pros & cons of a VA jumbo loan
Every mortgage product has advantages and disadvantages. Here’s what to keep in mind about the VA jumbo loan.
Pros of a VA jumbo loan
- Lower interest rates: You’ll likely find lower interest rates with a VA jumbo loan than with a traditional jumbo loan.
- Possibility of no down payment: Depending on your situation, you might not have to make a down payment.
Cons of a VA jumbo loan
- Funding fee: You’ll have to pay a funding fee of 0.5% to 3.6%.
- More extensive property requirements: The property will need to pass a VA home inspection.
VA jumbo loans vs. traditional jumbo loans
Like VA jumbo loans, traditional jumbo loans offer amounts over the conforming loan limit. And with that, traditional jumbo loans cannot be sold through the secondary mortgage market based on the guidelines set by Fannie Mae and Freddie Mac.
The limitations on resale of traditional jumbo mortgages make it challenging for borrowers to find these types of home loans. If you are seeking a traditional jumbo loan, you’ll likely need to make a 20% down payment. That’s on top of having great credit and significant cash reserves.
But VA jumbo loans can be securitized through Ginnie Mae, which makes lenders more willing to provide the loan. Plus, the guarantee by the VA makes a VA jumbo loan easier to obtain than a traditional jumbo loan.
VA jumbo loan FAQ
What is a VA jumbo loan?
A VA jumbo loan offers loan amounts over the conforming loan limits for your county.
This loan type is available through VA lenders that work with eligible borrowers. You’ll need to be an active-duty service member, veteran, or surviving spouse seeking a primary residence. If you are eligible for a standard VA loan, you may be eligible for a VA jumbo loan.
Does the VA allow jumbo loans?
Yes, the VA allows jumbo loans as part of its home loan benefit program.
If you have a full entitlement, you won’t encounter a loan limit from the VA.
How does a VA jumbo loan work?
A VA jumbo loan works by allowing eligible borrowers to obtain loans larger than the conforming loan limits. If you are eligible for a VA loan, a lender may be willing to provide a VA jumbo loan.
What is considered a VA jumbo loan?
A VA jumbo loan is considered any VA loan with an amount larger than the conforming loan limits for a particular county.
When making a home purchase in a high-cost area, the conforming loan limit can be higher. But it might not be enough if home prices are too high. That’s when a VA jumbo loan can come in handy because the loan amount can exceed the limits.
How much do you have to put down on a VA jumbo loan?
The required down payment for a VA jumbo loan varies. In some cases, you won’t have to make a down payment. But some lenders will require a down payment.
In either case, you’ll need to cover a VA funding fee of 0.50% to 3.6%. That’s a substantial fee that will add to your closing costs.
Can I get a VA loan for $1,000,000?
It’s possible to get a VA loan for $1,000,000 but you’ll need to meet the unique borrower requirements of a lender. You’ll likely need a great credit score and substantial cash reserves to qualify for a VA loan of this size.
See if you’re eligible for a VA home loan (Apr 27th, 2023)
Source: militaryvaloan.com
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Some people love to travel and have no problem spending their day in transit. However, others see air travel as a means to an end and find the whole airport experience a hassle.
There are ways to improve the experience for these travelers, including heading to an airport lounge before your flight.
A membership with Priority Pass — a global network of airport lounges, experiences and restaurants — can be a good option to gain lounge access.
Let’s look at Priority Pass lounges, how they work and some key things about the program.
1. Multiple types of airport experiences are available
Priority Pass is most known as a worldwide airport lounge program, featuring more than 1,300 locations from which to choose. However, Priority Pass isn’t just limited to lounges — it also includes experiences and discounts for its members.
The types of experiences available will depend on the airport. At some, you can get up to $28 for you and your guests to eat at eligible airport restaurants. At others, this can mean complimentary spa treatments before your flight.
And if you’re on an exceptionally long trip, you may appreciate the private bedroom suites available to Priority Pass members.
Finally, even if there aren’t lounges, restaurants or sleeping suites available, Priority Pass options may be available as discounts at select stores.
2. Not all memberships are the same
Now that we’ve discussed all the options available to Priority Pass members, there is one crucial caveat: Priority Pass has several different membership levels, and they’re not all equal.
The cheapest Priority Pass tier that will grant you lounge access costs $99 per year, but you’ll need to pay $35 for each lounge visit.
The most expensive is $469 per year but includes unlimited, complimentary visits for yourself — though you’ll still be required to pay for your guests.
🤓Nerdy Tip
Some travel credit cards offer a Priority Pass Select membership as a benefit — including Chase, Capital One and American Express.
3. Chase cards have the best memberships
The most well-known Chase card to offer Priority Pass Select membership is the Chase Sapphire Reserve®, which allows unlimited entry to cardholders and up to two guests.
Chase cardholders also receive additional benefits compared to other Priority Pass Select memberships.
In addition to lounge access, they get all the above experiences, including credits at restaurants, spa treatments and sleeping suites.
This isn’t the case for Priority Pass Select memberships through Capital One or American Express, which only include airport lounge access.
4. Capital One cards allow access to all authorized users
While Capital One cards don’t offer non-lounge Priority Pass access, they may be the best option if you’re trying to get a Priority Pass Select membership for more than just yourself.
This comes in handy because Capital One allows cardholders to add authorized users to their card for no fee — and authorized users are entitled to their own Priority Pass Select memberships, which include access for themselves and two free guests.
🤓Nerdy Tip
Capital One Venture X Rewards Credit Card holders also get access to Plaza Premium lounges.
5. Other cards offer more lounge access
If you don’t have a Capital One or Chase card, don’t worry. There are other choices when it comes to airport lounges.
Eligible credit cards from American Express include access to the Global Lounge Collection and a Priority Pass Select membership.
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The International American Express Lounges.
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Plaza Premium lounges.
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Airspace lounges.
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Lufthansa Business and Senator lounges.
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Select Virgin Atlantic Clubhouse lounges.
🤓Nerdy Tip
Chase and Capital One have also been growing their networks of private lounges. However, they’re much more limited than the American Express Centurion Lounge network.
Terms apply.
6. Limited passes are an option, too
What if you don’t travel enough to justify the cost of a full Priority Pass membership? You could pay for the mid-tier membership, which costs $329 per year and includes 10 complimentary visits annually.
Or, you could get a less-expensive credit card offering similar benefits at a much lower price. The Hilton Honors American Express Surpass® Card, for example, charges a $95 annual fee but provides 10 free Priority Pass visits per year. Terms apply.
Priority Pass lounges recapped
Priority Pass membership can be a valuable perk if you’re a frequent traveler, especially if you can access lounges through your credit card. However, you’ll want to remember that not all memberships are equal and that each card issuer has its own pros and cons regarding airport lounge access.
Even if you’re only on a plane a few times per year, gaining access to a lounge via Priority Pass may be worth it, especially with memberships available for less than $100 per year.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
Source: nerdwallet.com
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“Now that I’ve seen it,” I thought, staring at photos of a vacation home some friends had rented in upstate New York, “I can’t unsee it.”
It was a gorgeous rental, but in the living room the TV was just … too high.
There it was, mounted mere inches from the ceiling, a black rectangle looming over an otherwise attractive space like some kind of alien invader.
And it wasn’t just that vacation home – I found myself checking the height of TVs everywhere.
The waiting room at my doctor’s office? Too high.
At the local pub? Too high — but perhaps that one is excusable.
The living room in a friend’s new home? Too high. (But did I say anything about it to her? Offer any suggestions? Reader, I did not. I didn’t want to be THAT guy.)
Why had I become so focused, so obsessed with the relative elevation of television sets?
The answer to that was simple: I had discovered a page on Reddit called “TVTooHigh.”
Launched in 2019, the subreddit is exactly what the name implies: A massive collection of user-submitted photos of TVs that are mounted too high.
It’s almost absurdly specific, and almost absurdly popular – TVTooHigh has more than 123,000 members, placing it in the top one percent of all Reddit pages by size. And that doesn’t take into account all of the casual browsers like me, who visit from time to time but aren’t members.
TVTooHigh is funny, to be sure, but even in its specificity, it speaks to a broader point: For some reason, in this era of Instagram-ready home aesthetics and “vibes,” we absolutely love to laugh at other people’s failed projects and poor choices.
Why is that?
To help answer that question — and to learn how one positions a TV so it doesn’t look ridiculous – I spoke to Kelly Munchel of KM Interiors.
Munchel is a degreed interior designer who has been designing residential and commercial spaces and consulting with clients on décor questions small and large for more than a decade.
“A lot of people can relate to it,” she says of the tendency to gawk at terrible design decisions. “They see their own issues.”
And there’s also something encouraging about seeing a home that looks worse than yours – “I’m not as bad as I thought I was,” as Munchel puts it.
For an interior designer such as herself, there’s also the fact that she’s constantly thinking about how to make spaces better or more attractive.
“If I’m out to eat, I think ‘What would I have done’” with the décor, she says. “In the waiting room at the doctor’s office, I redo (the space) in my head.”
That said, Munchel does her best not to be judgmental:
“Common sense is a gift not given to everyone. And that’s OK.”
That lack of common sense is especially obvious when looking at something like TVTooHigh, where some examples seem not only unattractive but outright dangerous.
Which brings us to the question of how to correctly place a TV in a living space.
Munchel says there’s definitely a problem with hanging a screen too high.
“If you mount them too high, your neck gets sore form looking up,” She explains. “It’s like you’re in the front row of a movie theater.”
But the most important points to consider are how you use the space and how you use the TV. For example, do you watch TV lying down or sitting up?
In addition to height, there are other points to consider as well.
Glare on a screen is a major problem, so be sure to consider the placement of your TV in relation to light sources in the room.
Getting a TV that’s the right size for the space is important, too – a point Munchel realized in her own living room.
“When we moved into our condo two years ago, the TV was, like, seven feet long,” she says. “WAY too big for the space.”
After removing the giant set and patching up the holes it left in the wall, she opted to place their new, smaller TV over the fireplace – which is an extremely popular solution nowadays, especially in the era of wireless screens.
“A TV over the fireplace is very on point right now,” Munchel says. “Entertainment centers are kind of passé.”
But remember the question of size there as well. Many people who opt for a TV mounted over a fireplace choose a set that’s far too large for the fireplace, and the whole arrangement ends up looking top-heavy.
Munchel’s advice is simple: Make sure the TV doesn’t extend past the mantel.
As my conversation with Munchel wound to a close, I asked if she ever feels annoyed by the fact that designers have to always incorporate these awkward black rectangles into spaces that might be more attractive without them.
Her response was succinct and pragmatic:
“TV is important to Americans. Deal with it.”
Very true.
But when you’re placing that ever-present black screen, please – for the sake of your neck muscles if nothing else – keep it away from the ceiling.
An interior designer’s pet peeves
TVs might be a simple fact of modern life to a designer like Kelly Munchel, but any designer has pet peeves. Here are a few of the ones that bother Munchel the most:
BAD LIGHTING – “You need the correct bulb. Some bulbs give a blue hue, which is too cold. And you need to have lamps, chandeliers and pendants that are in proportion with the space.”
DRAPERY ISSUES – “While some people prefer no drapes (sad face), draperies really do warm a space. Even a simple valance can exude warmth. Plus, it’s a nice way to bring color and texture into a room. However, draperies that are too short – just like pants that are too short – are never a good thing.”😉
ARTWORK – “Your artwork needs to be the correct size for the wall. I am a fan of ‘if you love it, you will find room,’ however artwork needs to be incorporated the right way. Maybe that could be a gallery wall of many different-sized pieces to create a more pulled-together look.”
LARGE ARTIFICIAL PLANTS – “A/K/A dust traps. Please, no.”
DESTRUCTIVE PETS – “I had a customer who barely had furniture – they had a beautiful home, but they said the dogs ruined everything. They weren’t going to get anything new until the pets passed on. I had another customer whose dog ate the sofa (yikes).”
To read more Balance stories, click here.
Source: lancasteronline.com
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Founded in 1964, Fremont Bank is a family-owned and managed retail and commercial bank operating in the State of California.
The bank’s headquarters are in Fremont, California and branches exist in several California counties. Fremont was one of the first banks to offer banking services on Saturdays, a service that began in the 1960s.
Fremont Bank Locations
Fremont Bank’s mortgage options include fixed and adjustable-rate mortgages, FHA, Jumbo, and Combination loans.
Located in California, with branches in:
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- Contra Costa
- Alameda
- Santa Clara
- Monterey
- San Francisco
Retail Loan Offices in:
- Los Angeles
- Sacramento counties
Mortgages offered in California and Nevada only.
Fremont Bank Mortgage Facts
- Fixed and adjustable-rate mortgages available, as well as FHA loans, combo, and jumbo loans
- Loans are available for California and Nevada properties only
- Offers fully underwritten pre-approval letters, so borrowers know precisely how much they are approved for
- High-value home loans available, up to $2.5 million
- Low down payment and no closing cost options available to qualified borrowers
- Combo loan options let applicants combine more than one loan
- Special Purchase Team members advise applicants on which loans to consider
- No Closing Cost loans available for applicants who qualify
History of Fremont Bank
Fremont Bank began in 1964 and was founded by a WWII veteran who relocated to the San Francisco Bay Area in the 1940s. This bank is relatively unique in the sense that it has been family owned and operated from when it was founded to today.
The founder’s three kids continue to work with Fremont Bank and serve in management. As one of the first places to offer Saturday banking, Fremont Bank appears to have made significant efforts to tailor its services to the needs of customers.
According to the East Bay Times, in November 2018 Washington Hospital debuted a new facility, The Morris Hyman Critical Care Pavilion, named after Fremont Bank’s founder. Hyman was a well-known local philanthropist in addition to his work in banking.
Fremont Bank operates branches in California only, so borrowers should keep that in mind as they shop for a loan. Properties must be located in California or Nevada in order to qualify. The bank offers fixed- and adjustable-rate mortgages, FHA, Combo, and Jumbo loans as well as refinance programs.
One unique offering at Fremont Bank is the No Closing Costs mortgage and refinance loan program. Borrowers who qualify can avoid paying the typical non-recurring closing costs that are generally part of the mortgage closing process. To qualify, applicants must meet specific credit and other standards.
Currently, Fremont Bank has a Yelp score of 3.5/5 stars and 186 reviews. The bank’s BBB rating is A+ with customer reviews averaging stars.
Fremont Bank Loan Specifics
Fixed-Rate Loans
With this type of loan, borrowers get a single rate that stays the same for the entire length of the mortgage. Borrowers are protected in case Federal interest rates increase, so they know what to expect every month as they budget for their mortgages.
Applicants who want to lock-in a low rate may want to consider a fixed-rate mortgage, particularly if they plan to stay in the same home for several years. Fremont Bank offers 10, 15, and 30-year fixed-rate mortgages. Borrowers may need a 20 percent down payment to qualify for a loan.
Adjustable-Rate Loans
Although adjustable-rate mortgages do typically begin with a single low rate, market condition changes can result in rate fluctuations. Rates are subject to change and may increase or decrease over time.
This means borrowers could be obligated to pay higher rates and may end up paying more than they thought for a loan. It is also possible for rates to decrease. Applicants who may sell their home or want to refinance might benefit from adjustable-rate loans.
FHA Mortgage Loans
The government backs the Federal Housing Administration (FHA) loans from Fremont Bank and provide affordable financing with low down and monthly payments. Applicants who meet the income standards may pay as little as 3.5 percent down with an FHA loan. Fremont offers both adjustable and fixed-rate loans.
Combination Loans
Borrowers may qualify for a more expensive property or take out cash while closing on a home by obtaining a combination loan. Combo loans combine two different types of loans. Applicants may not need PMI, either. For applicants who need a bigger loan or plan to fund another project through the loan, a combo loan may be the right fit.
Jumbo Loans
For home purchases that are a bit more expensive than typical mortgages allow for, borrowers can obtain a jumbo loan. Fremont jumbo loans offer up to $2.5 million in financing. This option may be ideal for financing homes that are located in high cost-of-living neighborhoods.
No Closing Cost Loans
A unique program at Fremont Bank, the No Closing Cost loan allows borrowers to receive a mortgage without paying for any of the typical closing costs associated with mortgages.
For instance, borrowers avoid appraisal costs, credit report, escrow, title insurance, notary, points, recording, loan documentation, and other non-recurring expenses with getting a mortgage.
To qualify for this program, borrowers must be purchasing or refinancing a single-family home and must meet credit requirements. Closing costs that would otherwise be part of the applicant’s responsibility are refunded at closing.
Borrowers who qualify may save a significant amount of the total expense associated with getting a mortgage or refinance.
Fremont Bank Mortgage Customer Experience
Fremont Bank offers a variety of mortgage products and has loan guidance available for prospective borrowers who want to learn about their financing and refinancing options. Applicants can talk with a loan officer who can direct them to a suitable loan program.
Prospective borrowers must meet with a loan officer and Fremont branches, most of which are in the Bay Area, allow applicants to schedule appointments to learn more and begin the application process.
Prequalification is free and carries no obligation, so borrowers can get a better idea of what they qualify for and how much a home fits in their budgets.
Borrowers applying for mortgages at Fremont Bank will need to provide documentation, generally speaking, to demonstrate eligibility. To show that they can afford the monthly payments, applicants may need bank statements, W2 forms, tax returns from past years, pay stubs, documentation of assets, and other evidence, as requested.
Depending on the type of loan, requirements and credit standards may vary. Fremont Bank’s loan officers work with each applicant to find the right mortgage or refinance option.
Fremont Bank Lender Reputation
Fremont Bank’s Better Business Bureau rating is A+ with a customer review of three stars. Generally, this lender appears to have a positive reputation with customers*.
*Information collected December 5th, 2018
Fremont Bank Mortgage Qualifications
| Credit Score | Quality | Ease of Approval |
|---|---|---|
| 760+ | Excellent | Easy |
| 700-759 | Good | Somewhat Easy |
| 621-699 | Fair | Moderate |
| 620 and below | Poor | Somewhat Difficult |
| n/a | No credit score | Very Difficult |
Fremont Bank offers the best chances of approval and great rates to applicants with credit scores of 760 and higher. Within the 700 to 759 score range, borrowers may not receive the best mortgage options but will probably have a few different choices they can consider.
“Fair” credit applicants may not have access to the best offers from Fremont Bank. Without a credit score or credit history, borrowers may have difficulty getting a mortgage offer from Fremont Bank.
Applicants should bring plenty of income and asset documentation to their appointments with loan officers so that they can stand the best chances of approval.
| Debt-to-income ratio | Quality | Likelihood to get approval by lender |
|---|---|---|
| 35% or lessÊ | Manageable | Likely |
| 36-49% | Needs Improvement | Possible |
| 50% or more | Poor | Less Likely |
Homepage URL: https://www.fremontbank.com/
Fremont Bank generally offers more favorable terms to borrowers with debt-to-income (DTI) ratios under 30 percent. With higher DTIs, it may be better to ask about government-backed loan options and alternative loans.
Phone Number & Additional Details:
- Company Phone: 1-877-732-0033
- Headquarters Address: 39150 Fremont Blvd., Fremont, CA 94538
If you live in the California area, Fremont could be a feasible option for your mortgage, but if not, you are still left searching for the best bank. Don’t worry, we’ve got you covered.
Source: goodfinancialcents.com
Apache is functioning normally
My oldest sun turned 16 recently and you know what that means; he’ll be on the road soon.
He’s a good kid, I trust him to be a safe driver but that sill leaves the task of finding him a good first car. For the first time in a decade or two, I’m in the market for a vehicle. A lot has changed, but not everything. There’s still the same list of things to consider when thinking about which car to buy.
Some folks want something that goes super fast and will get them from place to place as fast as physically possible and look flashy while they’re doing it.
Some want something as a sort of status item to let people know that they are successful.
If you’re like me, something that gets good gas mileage is nice, but you’re really looking for something with some longevity. A car that you can depend on to never let you down. For this reason, I consolidated my research into a list of my personal favorite top 5 cars built to last.
Top 5 Dependable Cars Built To Last
- Porsche Boxster
I know what you’re thinking, “Really? You’re going to get your 16-year-old a porsche?” No way. This obviously isn’t going to be my son’s first car, but I repeatedly ran into this car when researching about dependability in vehicles. On most occasions, the Porsche Boxster stood head and shoulders above others in its class as far as reliability. The Boxster was introduced in the mid ‘90s as a light weight, turn hugging speed machine, featuring a 2.5 litre flat 6 engine. In 2000, they released a variant with a 3.2 litre and upped the base class to 2.7. From release to today, the Porsche Boxster remains one of the most dependable “vroom” cars out there.
- The good old VW Bug
In 1933, Ferdinand Porsche was comissioned to create a car for use by the greater German populous. Thus, a people’s car (or Volkswagen in German) was born with integrety through simplicity and economy being the basic ideas behind it’s conception. The factory survived ally controlled Germany in the mid to late 40s by serving to produce cars for the British army. The factory was almost moved to Britain but the British government decided it would be a massive waste of money and an un-marketable flop. Finally in the 60s, 70s and 80s the factory was pushed back to full production, distributing internationally and playing a major roll in the German economic recovery. To this day, the Volkswagen Beetle in America and Britain alike remains reminiscent of the 60s and 70s and one of the most simply built, dependable and economic vehicles of its time.
- Jeep
To this day, enthusiasts can’t come to an agreement about the origin of its name: a sluration of the army name “General Purpose” or GP or of GPW (G for government, P to designate it’s 80″ wheel base and W for it’s Willys-Overland designed engine). Originally developed for militaristic use as a light transport vehicle during WWII, Chrysler’s Jeep set a trend for four-wheel-drive SUV’s that is still an important image in today’s culture. They kept true to the idea that simple means dependable and created a rock solid vehicle that rarely if ever breaks down. When and if a Jeep does break down, the engine and frame were designed to allow complete strip down and rebuild in a matter of hours. Although not number one on my list, this is my personal favorite.
- Honda Accord
Between 1982 and 1997, the Honda Accord was consistently the best selling Japanese car in America. Honda developed that title built around a name that became synonymous with dependability. The name “Accord” was meant to be symbolic of “Honda’s desire for accord and harmony between people, society and the automobile.” In 1982, the Accord became the first Japanese car to be manufactured on U.S. soil in Marysville Ohio, concreting its position in one of the largest automobile markets in the world.
- Toyota Corolla
Staying true to Toyota’s tradition in using the variations on the word “Crown” in their main models, Corolla is Latin for “small crown.” Introduced in 1966, the Corolla is widely accepted as one of the most dependable, most economical cars ever, breaking the molded cliche of shoddy Asian car production. In 1997, the Corolla earned the title of the best selling nameplate in the history of cars and has maintained that through the new millennium. Over 35 million Corollas were sold as of 2007. Over the last 40 years, has been sold on average every 40 seconds. Where economy and dependability are concerned, it seems Corolla can’t be beat.
What are your thoughts on this list? Do you have your own car that you’d put up as the most reliable car? Tell us in the comments!
Related Automotive Articles
Source: biblemoneymatters.com
Apache is functioning normally
I love to read.
Reading as a hobby, however, can tend to get quite expensive especially if you are constantly buying books from Amazon, Barnes and Noble or even from a local used book store. One book leads to a second, and pretty soon you’ve bought the trilogy.
There are ways that you can make reading a much less expensive past-time. Getting books from your local library, buying books online at a steep discount and borrowing books from friends are all decent options that all have their pros and cons.
As technology changes, so do a lot of the things we’ve taken for granted for so long – including even reading.
In 2004 Sony released the first e-book reader with an electronic paper or e-ink display. E-ink displays are designed to mimic the look of ordinary ink on paper, reflecting light instead of giving it off like traditional backlit displays. It is easier to read in sunlight, and because the image is stable, it doesn’t require a constant refresh like other screens. Many, including myself, believe it gives a more pleasant reading experience versus a backlit display that can tend to be harsh and hard to read in sunlight.
For some time I’ve been interested in the e-readers like the Amazon Kindle and Barnes and Noble Nook that use the e-ink technology. I decided to wait around for a few years, however, in order to let the technology mature a bit. I also wanted to make sure that the formats were standardized a bit, and that the prices would come down on the readers.
After holding off on buying an e-reader for several years, I took the leap and purchased the Amazon Kindle Keyboard. I have also won a Kindle Fire and a Nexus 7 tablet in blog contests, and love them so far as well (although I still prefer e-ink for reading)!
Here are the Kindle versions currently available, with two prices listed where there is a version with and without special offers:
While I realize buying a Kindle isn’t cheaper than just getting all my books at the library, there are ways to find a ton of free reading material for your Kindle (or other e-reader device). Plus, if you want to go cheap you can get a Kindle for as little as $69!
Here’s a quick rundown of some sources off free reading material that have made the Kindle that much more affordable for me.
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Borrow Books From Others
While some of the other e-readers – notably the Nook, allowed you to borrow books that other users had purchased, up until recently Amazon didn’t allow this. Amazon has now instituted a book lending program for users of the Kindle where you can lend out books that publishers have allowed lending privileges for. Some newer titles won’t allow lending.
There are quite a few sites springing up where you can either lend your books out, or borrow one from someone else. Usually you’ll get credits to borrow books by lending your own. When you borrow a book you’ll get two weeks to read it before the rights revert back to the book’s owner. I’ve done this several times and it works quite well as I usually finish books within a week or less anyway. Some sites to check out for this:
- Lendle.me: This site has worked the best for me for borrowing and lending books to other users. For some popular titles there can be quite a
- BookLending.com: The site has a nice layout as well, although for whatever reason I haven’t been able to borrow from any of their users yet.
- Amazon Prime Lending Library: Amazon Prime users will also be able to borrow books.
Get Free Books From Amazon & Other Sources
There are quite a few sources for getting free books for your Kindle, or other e-reader. It should be noted that some of the sources will show you the same public domain titles as you’ve seen on other sites, while some will show more newer titles or original books.
- Amazon.com Top Free E-books: If you go to Amazon you can find a ton of free e-books. My favorite place to find them is via the “most popular content” page linked where you’ll see the top free and paid e-books. Amazon also has a ton of free books in the public domain. You can find them here: Amazon free public domain e-books.
- Nook Free E-books: Tons of free e-books from Barnes and Noble – and their Nook reader as well.
- Kobo Free E-books: Kobo as well!
- FeedBooks.com: Feed Books includes new and public domain content.
- Project Gutenberg: The largest source of public domain books. Many books are offered in Kindle compatible formats. On Kindle surf directly to http://m.gutenberg.org/
- FreeKindleBooks.org: Another way to get free public domain books, although most are the same as found on Project Gutenberg.
- ManyBooks.net: More than 29,000 eBooks for free that you can download for use on Kindle. Many the same as found on Project Gutenberg. Surf directly to http://mnybks.net on Kindle.
- eReaderIQ.com: Offers a regularly updated list of all non-public domain freebies on Amazon.com, as well as giving emailed updates when new free titles are added, kindle versions of books you want are added, or prices drop on a book you were going to buy anyway. Great site.
- Baen.com Library: Free Science Fiction e-books for sci-fi fans.
Borrow E-Books From Your Local Library
A lot of local libraries allow you to check out e-books. Unfortunately sometimes the formats are not compatible with Kindle (depending on the library).
Luckily you can download software and plugins that will convert the files into a Kindle compatible format, so that you can download them to your Kindle. (Many library books also have DRM, which could be problematic depending on what reader you’re using. While there are plugins for Calibre that will help you remove that DRM and convert files for Kindle, I won’t go into the DRM removal here as it’s a bit questionable.)
Amazon recently started offering native support for library lending, probably because many of their competion were already offering this. I’ve been using it with my local county library since it started earlier this year, and it works great! I just go to the library’s website, choose the book I want to check out, then download the Kindle version via Amazon. It’s then good for a 2 week lending period, at which time it expires. Easy!
Details about library lending for Kindle/Amazon can be found here: Library Lending.
Here are some software that you can use to find Library books to download both for Kindle and other devices.
- Overdrive Media Console: Libary eBooks, audiobooks, music, & video. The software can be used on your desktop computer, as well as having versions available for iPhone, iPad, Android phones and more. Their search will also allow you to search libraries for copies of books in formats that can be converted for Kindle.
- Calibre Ebook Management Software: This software will allow you to manage your e-library, and allows you to convert files to a format that works on Kindle before uploading it. Another great feature of the software is that it can automatically fetch news from websites or RSS feeds, format the news into a ebook and upload it to your e-reader. Sweet way to get your daily newspaper, on your e-reader!
Download Free .PDF Ebooks
Another thing I like about the Kindle is that it handles .pdf format documents out of the box. I’ve downloaded a ton of .pdf ebooks over the past couple of years, and now I’m able to open and read them on the Kindle. Before a lot of them were sitting un-read in a folder on my hard drive. Put all those ebooks to use and download them to your device!
Other Resources
There are a plethora of other resources for finding great Kindle reading material, and getting the most out of your e-reader. Here are a few of the best:
No Shortage Of Reading Material
As you can see from the list above there is no shortage of reading material for owners of the Kindle, or other e-reader devices. While you won’t always find a lot of new releases or best sellers, you’ll definitely discover a lot of good books you might never have thought to read before. You might also re-discover some of the classics since a lot of them are now public domain. Plus if you sign up for some of the sites or forums above you can also track new release free books that may only be free on Kindle for a limited time as a promotion.
I think the e-reader devices have definitely matured are now ready for prime-time. While the initial cost of the e-reader is definitely higher than buying physical books, over the long run you can still find plenty of frugal or affordable reading options, and ebook versions of books are often cheaper. For me I’m finding that the Kindle is a great way for me to enjoy one of my favorite past-times, reading.
Do you own an e-reader? What do you think of yours – and where do you go to find free or cheaper reading material? Join the discussion in the comments!
Source: biblemoneymatters.com
Apache is functioning normally
Last Updated on February 25, 2022 by Mark Ferguson
When considering either a 15 or 30 year loan for investing, most people choose the 15 year loan. 15-year loans may appear to save money over 30-year loans because they have a lower interest rate, but I would much rather have the flexibility of a 30-year loan. Buying rental properties is a great investment, especially when you are able to use a mortgage to buy the properties and still get great cash flow. Many investors will get a 15-year mortgage because the rates are a little lower and they can pay off the properties quicker. I use a 30-year loan when I buy my rental properties because I get more cash flow and I can make much more money buying more properties than I can be paying off loans.
Why is a short term loan better?
The biggest advantage of a 15-year mortgage is the interest rate is less than a 30-year loan. The difference in rates changes daily and varies with different banks, but a 15-year loan is usually about .5 percent less than a 30 year fixed mortgage. With a lower interest rate, you are paying more towards the principal and less towards interest.
Some people think the biggest advantage of 15-year loans is the shorter length of the loan. I don’t agree because you can pay a 30-year loan off early if you want too. You will have a higher interest rate, but .5 a percent is not a huge rate difference, especially when you consider how much you can make buying more properties.
Are mortgages front-loaded with interest?
A lot of people want to pay off their loans faster because they think the interest is front-loaded on a mortgage. That means you pay more interest at the start of the loan compared to the loan amount than you do at the end of the loan. The truth is you do pay more interest at the beginning of the loan, but not because the interest is front-loaded, but because the loan amount is higher. If you have a 5% interest rate on your mortgage, 5% of your payment is paid to interest. You pay less money to interest as time goes on because the loan amount decreases.
How much do you save with a lower interest rate?
If you get a 15 year, $100,000 loan on a rental property at a 4 percent interest rate, the payments will be $740 a month (check out bank rate mortgage calculator for calculating mortgage payments). Over the 15 years of that loan, you will pay $33,143 in interest. With a 30 year loan at 4.5 percent interest, the total amount paid in interest over the life of the loan will be $82,406.
On the surface, it looks like you are saving almost $50,000 by getting a 15-year loan. However, you are paying interest over 30 years on one loan and over 15 years on the other, which is deceiving. The payment on a 30-year loan is only $507 a month, which is $233 less a month than the 15-year loan. If you were to take that $233 a month and put it back into the 30-year loan each month, the 30-year loan would cost $39,754 in interest and be paid off in less than 17 years. It definitely costs a little more to have a higher interest rate, but over 15 years that is only $550 more each year. As time goes by that money is worth less and less due to inflation.
I go over specific numbers on 15 versus 30-year loans in the video below:
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Why do banks push 15-year mortgages?
You may hear banks and lenders push 15-year loans on the radio and social media all the time! I always wonder if the 15-year loan is so much better for consumers and worse for banks, why are the banks trying to convince people to get 15-year loans? There are a couple of reasons.
- The banks want people to refinance their loans because they make more money every time someone gets a new loan. You pay 2 to 5% in closing costs on a new loan and the bank or lender gets most of that money.
- Most banks do not want their money locked up for 30 years. There is a reason they offer a lower interest rate on 15-year loans because they want more people to get 15-year loans. 30 years ago interest rates were more than 10%! Now they are less than 5%. The banks know that the lower the rate is, the shorter-term loan they want. They don’t want their money tied up in long-term loans.
The banks and lenders push 15-year loans because they make more money with short-term loans.
Is a 15 or 30 year loan better?
You will pay less interest on a 15-year loan than a 30-year loan. However, you are paying a higher payment every month on the 15-year loan. If you add up the payment savings with the 30-year loan, you save $2,796 each year and $41,940 over 15 years by getting the 30-year loan.
That extra money can be used for many things that will make you much more money than that $6,000 in interest you save. You can save up the cash flow to buy more rental properties. You can use the money to build an emergency fund. You could also pay extra to the mortgage and if you ever need the extra money later, you can stop putting extra money into the mortgage.
If you have nothing to invest that money into, it might make sense to get the 15-year loan. If you want to keep buying rentals and build your empire, the best bet is to get a longer-term loan and buy as many rentals as you can now.
Something else to consider is that inflation makes money worth less in the future. The graph below shows how much more money a 15-year loan costs you at the beginning of the loan when inflation is considered. It takes until year 24 or longer to start saving money with the 30-year loan.
Why does a 15-year loan make it harder to buy more rentals?
Another huge factor when considering whether to use a 15 or 30-year loan, is qualifying for more properties. When banks qualify an investor, they will look at debt to income ratios. A 15-year loan will have a higher payment and increase your monthly debt payments. The higher your loan payments are, the less cash flow you will have, and it will be harder to qualify for new loans. Many banks will only count 75 percent of your rental income when qualifying an investor for a loan. Even if you are cash flowing with a 15-year loan, if you can only count 75 percent of the rental income, you may show a loss each month. If you have many rental properties showing a loss, it will be very hard to qualify for new loans.
A 30-year loan with its lower payments will make it easier to qualify for more properties.
What if you cannot get a 30-year fixed-rate mortgage?
I own 180k sqft rental properties and it is really hard for me to find fixed-rate mortgages. I use a local lender and they do not offer 30-year fixed-rate loans, only ARMs.
When I finance my rental properties, I use 30-year ARMs. An ARM is an adjustable-rate mortgage that has a fixed interest rate for a certain amount of time. The interest rate on an ARM can adjust up or down after the fixed time period is up. My portfolio lender offers 5 and 7-year ARMs with a 30-year amortization. The rate will stay the same for the 5 or 7-year term but can adjust after that term is up. There are limits on how much the rate can adjust each year and a ceiling that it can never go over. The great part about ARMs is they have a lower rate than a 30 year fixed rate loan and even the 15-year fixed-rate loan.
If you get an ARM for your rental properties you will have an even lower payment than a 30 year fixed rate loan and save money in interest costs over a 15-year fixed-rate loan. To me, it is the best of both worlds.
Why is an ARM less risky than you may think?
There are obviously some risks involved with an ARM because the rate can go up after 5 or 7 years. I always have plenty of reserves and cash flow to make sure I can afford the higher payment if the rates adjust. Even if I hold the loan well past the initial fixed-rate term, it takes a few years for the ARM to become more expensive than a fixed-rate mortgage. Chances are rents will increase in the time period as well. If you have enough cash flow and a plan for when rates could increase, you should have no problem with an ARM.
If you don’t have enough cash flow and your payments go up, you could get into trouble with an ARM. Negative cash flow is hard to sustain and it will make it harder to qualify for loans as well.
Many lenders will also only offer ARM loans after you have a certain number of mortgages in your name. I would suggest getting the fixed-rate mortgages when first starting out, and as you advance in your investing career look at the ARM option.
Why is a lower payment more important than a lower interest rate?
ARMs allow a small payment at the beginning of a loan and possibly a higher payment in the future. The nice thing about the lower payment is you have more cash flow and inflation comes into play when you are investing money. If you can pay less money now and more in the future it is a good thing, because inflation will make money worth less in the future. Even though your payment might go up on an ARM; 5 or 7 years later that money will be worth less and your rents could have gone up. If you use the money you save on an ARM to invest in more rental properties or something else with a decent return, you will be way ahead than if you had paid a higher payment with the 15 or 30-year fixed loan.
Why is a 30-year loan safer than a 15-year loan?
Many people have a tough time saving money and the higher your mortgage payment is, the harder it will be to save. Having an emergency fund is very important for financial stability. If you do not have an emergency fund, do not get a 15-year mortgage. Get the 3o-year mortgage, and save up for the emergency fund. Once the emergency fund has enough money (6 months of living expenses) you can pay off your mortgage early if you would like to.
Remember that you see no real benefit to paying off your mortgage early unless you pay off the entire loan, refinance, or sell. Your house payment will stay the same until the loan is paid off in full. If you need to access the equity you have in your house, you cannot ask the lender to give you back what you have paid early. You will have to sell the house or get a brand new loan (refinance or home equity line of credit).
If you get a 15-year loan and have a medical emergency, lose your job, or cannot work, the bank will not lower the payment for you. You have to keep paying that high mortgage payment every month. If you had a 30-year mortgage and were paying more to it every month, an emergency would not be nearly as devastating, because you could stop paying extra.
Does a 15-year or 30-year loan allow you to buy more rentals?
My goal is to buy as many rentals as I can. Not only do I want each rental to make as much money as possible, I want to buy a lot of them! The 30-year loan allows you to buy more rentals because you are making more money each month. If you take that money and reinvest it into more properties, the results are phenomenal.
My nephew, who is a math whiz, made this amazing graph. Here is how it was created:
- Each rental has a $120k value and $1,200 a month rent. The house was bought 30 percent below market value. but we spent $10k on repairs and 20% on down payments. We also spent 4% on closing costs to buy.
- Monthly costs are 1.5% for taxes and insurance, 8% for property management, 5% for vacancies, and 10% for maintenance.
The chart shows what happens when you buy 1 property with a 30-year loan and reinvest all the cash flow into buying more properties vs 1 property bought with a 15-year loan and reinvesting all cash flow into more properties. You buy 119 houses over 30 years with 30-year loans and 32 houses with 15-year loans. You are making $53k a month with 30-year loans vs $11k a month with 15-year loans.
This does not account for inflation! With inflation, the 30 year is even better because rents increase on more properties. You buy 147 houses vs 38. It may be tricky getting a 30-year loan on that many properties, but it shows the value of investing your money early on instead of paying off debt early.
Conclusion
On the surface, a 15-year fixed-rate mortgage may seem like the best way to go. It saves money on interest over the life of the loan and has a shorter term. I believe the 15-year loan is the worst choice because you are tying up your money, making it harder to qualify for loans, and you could be investing that money in something that gives a higher return. If you get a 30-year ARM, the interest rate will actually be lower than the 15-year loan, and you might be able to pay that loan off faster than the 15-year loan.
Build a Rental Property Empire
Source: investfourmore.com