401K Today

Driving Your Retirement Vehicle Home

A 401K should be on the radar of any W-2 employee that wants to have a comfortable retirement.  A 401K builds and earns interest tax free for retirement years.  Taxes are paid on withdrawals in retirement years when income and taxes are lower.  But a 401K has some other benefits that many people are not aware of.

Having a nest egg is like having a safety net.  Most 401K plans allow for a hardship withdrawal before 59 and a half.  With the security of knowing that there is money set aside in case of emergency, there is less fear in asking for a raise or taking a chance on a good opportunity that presents itself. 

The number one hidden benefit to having a 401K is that it can be borrowed against.  The 401K is still earning interest when borrowed against.  Most plans allow the interest paid to go back into the retirement account – which actually benefits the retirement account.  For more information about borrowing against a 401K, CLICK HERE.

The average 401K balance is just under $100K.  Most 401K plans will allow a loan of up to $50K or 50% of the vested balance – whichever is less.  The loan does not affect credit, nor is it taxable.  From a lending standpoint, the payments on the loan do not count against a borrower’s debt to income ratio. 

Borrowing against a 401K can often be the difference between home ownership and renting.  A larger down payment using a 401K loan could also be the difference between paying a higher rate of interest or higher mortgage insurance rate on a home. Considering the rate at which housing increases, borrowers can leverage and maximize the benefits of their retirement savings to live the American Dream of home ownership.  Call the Easterbrook Team today for more information.

Can't Make This Up!

More housing news from Zimbabwe.  Dr. Smelly Dube won three awards for her achievements in housing development, which is cool.  "A rose by any other name would smell as sweet".   The article then took another fast turn like a comedian switching topics - According to the Zimbabwe Association for Housing Finance “providing proof of incomes from informal business activities continued to be problematic for increasingly cautious lending institutions.”  Sounds like 2006 all over again.  Here's the article: CLICK HERE.

The Feds Vote to Raise Rates!

Mortgage News Update

The Bad: the Fed announced today that it would raise interest rates .25%. 

The Good:  the market over compensated for this increase and had it built into pricing.  It is interesting that we have a pricing improvement when the Fed increased the cost of money.

We cannot predict what is going to happen days from now – things like a stock market crash, a world event – such a missile scare or worse.  We can identify what is currently happening in the market.  The Easterbrook Team subscribes to a service that provides up to the minute alerts and information that allows us to provide borrowers with information they need to make decisions about locking their loan. 

The Low Down on First Time Homebuyer Programs

There is a lot of talk in the news lately about low down programs coming and going.  A loan strategy that we are absolute ninjas at is a group of loan products offered through CalHFA which allows very, very low out of pocket for our borrowers.  The best part is that it is sponsored by federal and state government, which has provided CalHFA with ample funding. The Easterbrook Team will be hosting a public discussion on first time homebuyer programs on June 7^th at our office at 806 Bidwell Street in Folsom.  For more information, CLICK HERE. 

Ride Across San Francisco Bay!

On Sunday, April 15^th, we are hosting a casual bike ride from Fort Baker in Sausalito across the Golden Gate Bridge to San Francisco where we will go through the Presidio, Crissy Field, the Palace of Fine Arts, Fort Mason, and the Warf.  We have 15 riders signed up and want to get at least 5 more.  The cost is a $20 donation to Lyon Cares that primarily benefits the Salvation Army.  Provide your own bicycle and water.  Transportation to and from San Francisco and a delicious lunch will be provided.  Please confirm your reservation by April 1^st with the Easterbrook Team at (916) 850-6050 or EasterbrookTeam@SPMC.com.   

Real Estate Contracts

On Thursday afternoon, 3/22, at 6pm, we will be hosting the public for a discussion about real estate contracts through Home Loan Workshop.  We will be talking about the typical real estate purchase agreement, timeframes, customs, ways to save money, and ways your lender can assist you getting your offer accepted. To join the discussion, just sign up for the free class HERE. 

The Lock Debate

Don’t Lock Now…

Actually, You May Want To

Among the more weighty decisions when getting a mortgage is when to lock in the interest rate. Even small fluctuations can affect your monthly mortgage payment, and create a huge difference in the interest over the term of the mortgage. If you or your clients are shopping for a home, here are some realities to shape your decision about when and how to lock in a mortgage rate. The Easterbrook Team can help.  

Rates are near historic lows, but are rising. Many homeowners today will barely, if at all, remember the days when mortgage rates ran into the double digits. In 1981, mortgage rates hit a peak of nearly 19%. Since then, the overall trend has been to declining rates, including in the period since the housing crisis in 2008, when rates have consistently been below 6%. It’s been more than 25 years since the average annual mortgage rate was in double-digit figures, and it was only just so in 1990--at 10.13%.

Because our economy has been improving, rates have been back on the rise again since March 2017, following the first hikes in the federal funds rate since 2015. Further, the Fed chairman has all but announced that rates will continue to rise in 2018, and analysts also predict that will be the case. That makes it unlikely now that you’ll lock into a mortgage, only to see rates drop before the lock expires.

The lock term is flexible. At a time when rates are dropping, it can make sense to lock later in escrow to limit the time in which more favorable rates may materialize. When the trend is reversed, however, as is the case today, there’s a stronger case to lock in early, and for a longer period, rather than a shorter one, to minimize the likelihood that rates will rise during the lock period. The customary rate lock is for 30 or 45 days, but you can also double or even triple that period fairly easily. The longer the lock, the higher the interest rate will be.  We may recommend considering the longer period in the current environment if you have a long escrow – typically over 30 days.  

Peace of mind is priceless.  Another aspect to consider about locking is the fact that every day the loan is not locked, the media is constantly reminding us of the volatility of rates.  This can create a great deal of anxiety.  With all the other aspects of purchasing a home, locking a loan, especially in a rising interest rate environment, can put your mind at ease and help you focus on the excitement of purchasing your new home.

First Day of Spring 2018 – March 20th

During spring, the axis of the Earth increases its tilt relative to the Sun, and the length of daylight rapidly increases for the hemisphere and warming occurs. The warming hemisphere causes new plant growth to “spring forth,” giving the season its name. More fun spring trivia – CLICK HERE.

According to Google, homes that sold in the first half of May were also purchased for about 1 percent more than the average listing, which translates to a premium of about $1,700. The best time to sell a home in the U.S. is between May 1 and May 15.

Fun Spring Art for Kids

Here are 50 fun spring art projects to do with kids – CLICK HERE.

MI DTI

Genworth and MGIC are pushing back on Fannie and Freddie's new 50% DTI - said to be reevaluating underwriting standards with the intent of bringing back a 45% DTI - OUCH!  When you think about it, it's no skin off Fannie and Freddie's back to offer even 100% financing when they're not the one insuring the loss - for the article, CLICK HERE.

Assets to Buy a Home

How Much Do You Need, Really?

Well, we’re going to tell you on Thurday night at 6pm.  How much you need to buy a house, that is.  Assets will be the topic and how they fit in the homebuying process.  We will also discuss creative solutions for those that are “asset challenged”.  We will provide handouts and be available for questions too.  John and Patty are seasoned Mortgage Loan Officers, experienced in all facets of home loan financing. 

Thursday!  March 8th

6:00 PM - 7:00 PM

806 Bidwell St, Folsom, CA 95630, USA

Sign Up Here!

Not Haunted!

Realtor’s “Not Haunted” Sign Draws Laughs, Boos

For Houston-based Realtor Ellis Young, a traditional “For Sale” sign just won’t do. Instead, Young likes to add uncanny and hilarious phrases — the latest being, “Not Haunted.”  But Young got a little more than he bargained for when a couple neighbors wrote a Facebook post calling Young “unprofessional,” and then sent the post to ABC 13 in Houston.

“You can’t do it the same old way. You’ve got to spice it up. You’ve got to look different. You’ve got to keep it fun,” Young explained to ABC 13.  Young has also featured signs like “Harvey Tested”, “Gluten Free House”, and “Backyard Included” to get potential buyers to turn their heads.

It’s hard to ignore an idea that has gone viral nationwide.  We hope it translates into sales for him.

Home Values Up!

Home Values UP 14%

Sacramento County's median price for resale homes rose by nearly 14 percent in January compared to the same month last year, though the number of sales slumped from December in a typical seasonal pattern, CoreLogic reported Thursday.  For video and article in the SacBee, CLICK HERE.

At Any Rate

Useful Mortgage News…Mostly Fact: In January of 1985, 30 year fixed mortgage rates were more than 13 percent. By January of 2012, rates had dipped to under 4 percent. What’s happing right now with rates?  Even with slightly higher consumer borrowing rates, housing loans are still a bargain compared to past years and decades. Economist David Clark... "...certainly mortgage rates have gone up, but they're still in the neighborhood of 4 percent. By historical standards, that is low. If you look at 30-year fixed rate mortgage where it stood at the beginning of January, it was just under four percent at 3.95 percent. By February it had moved up to 4.38 percent..." Clark says by historical standards that rate is still low... "....it's because the Federal Reserve has started moving up short term interest rates. They have a federal funds rate that they set is at 1.5 percent now. It was at 0.75 percent this time last year. The reason they've done that is that they're concerned about inflation...." He says those Federal Reserve moves caused some sharp adjustments in the stock market. That also pushed up the long term rates. He says when lenders are providing 30 year loans they want to know what is happening with inflation. Clark says the moves by the Fed now are designed to keep inflation under control. Tip: Want to know where rates are on any given day?  Check the price of gas at your favorite intersection – there is a direct relationship between gas prices and inflation – CLICK HERE.  Or call us.  We’re always here to help…and put your business pedal to the metal!   Putin’s Interest Rate Woes Vladimir Putin proclaimed this week that Russia must get interest rates below 7% to solve the country’s housing problem.  We always thought that their housing problems were because half the country is living in poverty.  He solved that problem in the same speech – he ordered the minimum salaries to be increased.  But won’t artificially raising incomes cause inflation, thereby rising interest rates?  Maybe Putin can outlaw inflation in Russia too. Assets - How Much You Need to Buy a Home Think you need 20% of the purchase price to buy a home? Think again. This class will describe what an asset is and what is not acceptable for a home purchase. We also will discuss creative solutions for borrowers that are "asset challenged". We will provide handouts and be available for questions. Instructors will be John Easterbrook and Patty Aguon. John and Patty are seasoned Mortgage Loan Officers, experienced in all facets of the home loan financing. Sign up now. Thursday!  March 8th 6:00 PM - 7:00 PM 806 Bidwell St, Folsom, CA 95630, USA Sign Up Here!