Rob’s Report – Covering the Market, Why a Heloc May Not Make Sense and How a Concurrent Closing May be A Great Solution in Buying in Today’s Market…

It’s been some time since I sent out a newsletter on rates, the market and food for thought in the world of real estate…

What’s prompted me to send a report now has a lot to do with rising home inventory, rising interest rates and the Dow Jones, down by 11.32% year to date currently resting at 32,654 down from 36,799 back on January 4th.

About RATES…

First a foremost as we have seen rates increase from 2.75% in December of 2021 to 4.75 (and higher) to date with only a .75 increase in rates by the Federal Reserve, the Federal Reserve is expected to increase rates 4 more times pushing Prime from a current 4% to 6% in the future and who knows how much higher residential, commercial, and reverse rates will go.

About HELOC’s…

With rising rates, why would a consumer choose a HELOC for cashout over a fixed rate 1st, when HELOC’s can only keep pushing up in rate as most of them are tied to Prime plus a 1 Margin or as of today, 5%.  If the Fed continues with what they said, then a HELOC’s future rate, will be closer to 7% in the near future based on what they are predicting.  In summary, why not lock into a fixed rate now?  In addition, there are some things to consider on why a HELOC may not make sense:

  • Were in a rising rate climate with prime now at 4% plus a margin of 1 (or higher) resulting in a rate of 5% or higher in rate
  • Due to changes in the tax code back in 2018, one cannot write off HELOC’s or 2nd’s, interest wise.
  • Due to their volatility…In the past if property values dropped, HELOC lenders would cut the “line” amount or freeze the account all together.

If you’d like to look at a 1st mortgage refinance, please complete the following…

https://101loan.com/refinancing/

REVERSE MORTGAGES’s…

With rates climbing, home values potentially leveling out and the Dow Jones down by 11% in 2022, much of what we have seen ever 10 years seems to be starting over again and consumer confidence is dropping.  If your over 55 years of age and have at the least 45% equity in your home, you might want to consider the benefits of a fixed rate reverse mortgage.  To determine your options without running credit, please go to https://101loan.com/reverse-mortgage-start/ and complete and we will research your options and provide them to you.

CONCURRENT CLOSING’s and Their Benefits…

If your thinking of buying a home and bridge options don’t work for you at https://101loan.com/blog/do-you-want-to-buy-first-and-then-sell-later-bridge-financing-may-be-the-answer/, you might consider a concurrent closing based on the following steps:

  1. Get pre-approved based on selling current home.
  2. Start looking at new homes and list your current home.
  3. Accept an Offer with a flexible long closing and with a flexible long rent back after you close.
  4. Make a contingent offer or no contingent offer depending on when your closing date is on selling.
  5. Close on the home you are selling and then close on new home or concurrently close at the same time.

Since the market is still strong and more inventory comes on each day, this is a solution you may want to consider as the incredible savings compared with any of the options in the above lin

If you would like to purchase or refinance a property or obtain a reverse mortgage and rid yourself of mortgage payments, 

BTW…To Learn More About Inflation and the Market, go to here.

Best Regards,

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

408-377-4123 o  650-465-8957 c

101 Loan – 6090 Hellyer Avenue #100, San Jose, CA 95138. CA DRE #01165697  NMLS #121019

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.

Note: Interest rates and loan programs quoted are subject to change without notice or until locked and approved by lender.

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What Your Financial Planner May Not Be Telling You

Financial Planning can be a complicated equation with several moving parts that are constantly changing.  I recently heard that, a house with a crumbling foundation is worthless.  A house, like a financial plan, must have a solid foundation or eventually it can be weakened or even worthless!

This made me wonder why I rarely hear about insurance products as a foundational tool for a properly designed financial plan.  Insurance to some may seem expensive, yet what’s the true cost of NOT having insurance?   I have heard the term “Self-Insuring” or handling the potential risk on your own, seems to be a risky approach to protecting one’s current estate, future retirement lifestyle and legacy for their loved one’s.

We recently learned that there are three primary risks in retirement that jeopardize a retiree of achieving their dream retirement: (1) Market Volatility Risk; (2) Tax Risk; and (3) Longevity Risk.  In other words, losing money in the stock market, while taxes increase and living a long time, could have high risks once retired.

Life Insurance comes in various forms, based upon one’s protection needs:

  • Term life insurance is known as temporary life insurance.  It covers you for a specific period of time.
  • Permanent life insurance is known as cash value life insurance.  It’s used to address permanent concerns and typically covers one until death.
  • Life Insurance provides benefits that can strengthen your overall financial plan.

Long-Term Care (LTC) insurance is a “safety net” for an extended period of time:

  • The need for care may be due to cognitive or physical impairment.
  • LTC can be paid monthly, annually or in a single premium.
  • A 65-year old couple has a 70% chance of one of them needing LTC in their lifetime.

Disability Insurance (DI) is income protection that we can rely on while we are working:

  • If unable to perform one’s job duties, DI will replace a portion of their income, tax-free.
  • DI allows for the continued funding of lifestyle and retirement plans.
  • Severance disability insurance plans can be included in severance packages.

For a recent presentation on the above, please see: 

Finding a Life Insurance, Long Term Insurance or Disability Insurance Advisor that understands how to stabilize the foundation that your financial plan sits on, is key to a successful plan.

For advice on any of the above. please contact:

Nico Wiborg – (650) 465-8957  nwiborg@ft.newyorklife.com

Todd Wellnitz – (415) 846-1521  todd@wellguardfinancial.com

(The above information is for educational purposes only.  For more information on the above, please contact your financial planner, tax planner, estate planner or attorney)

Any questions on the above or lending, please contact me at:

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

408-377-4123 o  650-465-8957 c   408-608-1921 f

101 Loan – 6020 Hellyer Ave #150, San Jose, CA 95138

CA DRE #01165697  NMLS #121019

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.