Michael Santos

MLB Residential Lending

Paying Rent And Mortgages With A Credit Card

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Using a credit card for mortgage or rent

When people purchase a house, they usually set up their mortgage payments as a direct draft out of a checking account. The same is typically true of rent payments; however, many people have wondered if there was another way to pay rent or mortgage. After all, there are credit cards out there that have fantastic rewards. It would be great to take advantage of these rewards by placing rent and mortgage payments on a card.

Sadly, there is no way to pay rent or mortgage with a credit card without a fee. There are bank interchange fees that would lead to a surcharge for banks and landlords. This prevents them from readily accepting credit cards without a fee. What if there was a better way?

Possibilities For Credit Card Payments

It is rare to find an apartment complex that accepts a credit card. It is even harder to find a bank that does this. It is helpful to ask about the different ways to pay rents and mortgages when talking to banks and landlords. It can be helpful to do the math on any fees that are charged and compare them to rewards. For example, if a credit card gives five percent cash back on rotating categories, it might be beneficial to take advantage of this five percent back and pay a two percent fee to use the card. This would still net three percent in savings.

Using Third-Party Payment Options

There are also third-party service providers that will allow someone to pay nearly any bill online with a debit or credit card. This includes rent and mortgage payments. These third-party sites still charge fees. Sometimes, it is a flat rate. Other times, it is a percentage of the total.

When To Use Credit And Debit Cards

The most appropriate time to use a credit or debit card to pay this bill is when a minimum spending requirement is needed to trigger a significant bonus. For example, if a card requires someone to spend $5,000 to trigger a bonus, it is easier to reach this number by using the card to pay rent. Otherwise, it is better to calculate the fee versus and points and see which option makes the most sense.

More Than 25% Of Millennial Homebuyers May Be Financially Unprepared

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More Than 25% Of Millennial Homebuyers May Be Financially UnpreparedMillennials are the first generation in America that will probably not be able to do as well as their parents. In the United States, there is not as much upward mobility as there was in the past. What is the cause of this?

CNN reports that Millennials have more college degrees than their parents. They also have an enormous amount of student loan debt. Many millennials have lower-paying jobs than their parents had at the same age when adjusted for inflation. Spending patterns changed as well, due to the high cost of living.

Finding The Money

Saving is not easy. The net worth of Americans, who are from 18 to 35 years old, decreased by 34% since 1996. Even though millennials are financially savvy, the 2008 global financial crisis made it difficult to find jobs and made saving for many nearly impossible. Those who have been able to put aside some money in the last ten years are lucky if they have $8,000 in savings, which is the average for those millennials trying to save for a home purchase.

Soaring Home Prices

By 2018, the real estate market recovered from the 2008 collapse. In most American cities, housing prices are going up significantly. The home prices surpassed pre-crash levels and now continue to rise. Soaring home prices make buying a home very challenging.

What To Do?

For most millennials, the best choice is to continue to live with their parents and use the lower cost of living as an opportunity to put away enough money for the required down payment to buy a house. Many plan to live very frugally and to save for up to five years if they want to buy a home of their own.

For others, they are developing co-ownership plans, where millennials plan to share home buying with more than one person. In these deals, they become the landlord and the tenants of a multifamily property that they buy together.

The Math

The median home price in America is $226,800. First-time buyers, who qualify, can get FHA-backed mortgage financing with as little as 3.5% down. Still, that is $7,938 just for the down payment. There is also the need to have 2% to 5% of the loan amount for closing costs, which can add up to $10,943.

Financial prudence recommends having at least three months of living expenses in savings to cover any unexpected temporary emergencies, like losing a job. Add another $12,000 for this contingency. This means to safely buy a home at the median price, with a low-down-payment loan, a millennial may need to have as much as $30,881.

For conventional financing, with 20% down, the numbers are much higher. For that type of financing, a millennial needs about $66,432!

Summary

Millennials face significant challenges in homeownership that are unique to their generation. For these reasons, many are delaying homeownership for at least five years and living with their parents longer, to save more money, to make their dream of homeownership come true in the more distant future.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional.

How to Buy An Investment Property

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How to Buy An Investment PropertyIt is important for everyone to take steps to diversify their assets. While many people take this to mean holding multiple stocks, bonds, and mutual funds in the market, this also includes branching out into the real estate industry. The real estate industry is far more stable than the stock market and provides a fantastic opportunity to generate reliable returns. At the same time, there are lots of options to choose from when it comes to investment properties.

Here are a few tips everyone should keep in mind.

Buying And Renting

One option is to purchase a single-family home as a second building and then rent it out. On the other hand, it is also possible to purchase a multi-unit property and rent out each individual unit. One of the biggest factors to keep in mind is that the owner is going to be responsible for collecting deposits, checking the backgrounds of potential tenants, conducting repairs, and completing maintenance tasks. 

If the property is located in a desirable area, it is possible for someone to collect enough rent to cover the cost of the mortgage and more. At the same time, it is also possible that someone might end up spending a considerable amount of time managing the property. It might be a solid idea to hire a property management company; however, this will eat away at the revenue. These are a few of the key factors to think about.

Flipping Houses

Another option real estate investors can consider is flipping houses. In this process, someone buys a home (which is often in a state of disrepair and inexpensive), repairs it, and then sells the home for a profit. It is also possible that someone might end up spending a significant amount of time and money renovating the home, which might eat away at any financial gains. Be sure to know exactly what repairs and renovations the home is going to need before buying.

A Real Estate Investment Trust

Sometimes, it might be too much for someone to buy individual properties. One possible option is called a real estate investment trust (REIT). This is a company that owns numerous big properties that generate incomes. Therefore, these trusts are often compared to mutual funds in the stock market but for real estate. Different REITs specialize in different areas, so there are lots to choose from.

If you are interested in buying a new home or refinancing your current property, be sure to consult with your trusted home mortgage professional.

What’s Ahead For Mortgage Rates This Week -March 17th, 2020

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What’s Ahead For Mortgage Rates This Week -March 17th, 2020Last week’s scheduled economic reports included readings on inflation and consumer sentiment. Weekly readings on mortgage rates and new jobless claims were also released.

Inflation Holds Steady in February

The Consumer Price Index rose 0.10 percent in February and matched January’s reading. Analysts expected no inflationary growth for February and noted that the Coronavirus had not yet impacted national inflation.

Higher rents and grocery prices caused inflation to rise in February. Year-over-year, the Consumer Price Index rose 2.30 percent in February after posting its highest reading of 2.50 percent in January; analysts expect inflation to decrease in the coming months.

The Core Consumer Price Index, which excludes volatile food and energy sectors, grew by 0.20 percent and matched expectations and January’s growth rate.

Mortgage Rates Mixed as New Jobless Claims Fall

Freddie Mac reported that the average rate for 30-year fixed-rate mortgages rose seven basis points to 3.36 percent last week after posting the lowest rate on record the prior week. The average rate for 15-year fixed-rate mortgages fell two basis points to 2.77 percent.

The average rate for 5/1 adjustable rate mortgages dropped by 17 basis points to 3.01 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.

New jobless claims fell to 211,000 claims filed from the prior week’s reading of 215,000 first-time claims filed. Consumer sentiment dropped to an index reading of 95.90 in March as compared to February’s reading of 101.00; analysts expected consumer sentiment to fall to an index reading of 95.00.

The March reading was the weakest in five months and was attributed to fears of the Coronavirus. The current consumer sentiment index covered data through March 11 and index readings are expected to fall lower as impacts of the Coronavirus unfold.

What’s Ahead

This week’s scheduled economic news includes readings from the National Association of Home Builders on housing market conditions, sales of pre-owned homes reported by the National Association of Realtors® and Commerce Department readings on housing starts and building permits issued.

The Federal Reserve will issue its post-meeting statement of its Federal Open Market Committee and Fed Chair Jerome Powell will give a press conference after the FOMC statement. Additional economic news and policy announcements related to the Coronavirus may also be released.

How To Finally Become A Real Estate Investor This Year

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How To Finally Become A Real Estate Investor This YearInvesting in real estate remains one of the best ways to accumulate wealth in America. There are six ways to get started in real estate investing. One way does not require any investment capital, just an investment of your time. Ways to get started include investing in a REIT, buying an incoming-producing property, using a buy-and-hold strategy, flipping houses, crowdfunding, and wholesale deals.

Investing In A REIT

A real estate investment trust (REIT) is an investment instrument that offers a proportional ownership interest in a real estate portfolio that follows a particular investment strategy. A private REIT has a minimum investment that could be $1,000 to $25,000. A publicly-traded REIT sells in shares, just like stocks on the stock exchange. The investment minimum is just one share and some REITs have share prices under $100.

Income-Producing Property

Buy a home and rent it out. For this strategy to work, you do have to deal with the tenant headaches, unless you can afford to outsource the landlord’s work to a property management company.

Buy-And-Hold Strategy

Buy raw land for cheap on the outskirts of a growing town and wait the time necessary for the town to overtake your land for the opportunity to subdivide and develop it for a high price.

Flipping Houses

For those who like doing contracting work, or who partner up with a contractor, there may be profit in buying some fixer-upper homes to renovate and sell for more than the acquisition price plus the renovation costs.

Crowdfunding

Crowdfunding is a way to participate as a small investor in real estate deals and also to fund your own deals.

Wholesale Deals

Wholesale deals can be accomplished with no money down. You work for other investors and secure properties at lower than market prices by controlling them with an offer that is accepted and then assigning the deal to the investors for a fee.

Summary

If you have been thinking about becoming a real estate investor, now is the time to do something about it. Even if you start with only $100 by buying shares in a REIT, at least you got started. Once you get your real estate investment strategy going, you will find it to be a very rewarding experience, if you are careful and make wise decisions.

Be sure to associate with an expert REALTOR® in your marketplace area to get sound advice and information.

If you are in the market for an investment property or interested in refinancing your current home, be sure to consult with your trusted home mortgage professional to discuss financing options.

The Long-Term Toll Of College Costs

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The Long-Term Toll Of College CostsTaking out enormous student loans to get a college degree may be a terrible idea for some. The burden of paying off this debt can make it far more challenging to do other important things like buying a home.

Here are some common problems that come from taking out large student loans:

  • Not Worth It: The college degree may not help you land a high-paying job. Even high-paying jobs like being a dentist have extremely high educational costs as well. Aspiring dentists borrow, on average, over $500,000 to go to dental school and spend multiple decades paying it back.
  • Tuition Hyper-Inflation: Colleges and universities saw the easy money from student loans as a great reason to increase tuition. In many institutions, tuition increases, over the past 42 years, went out of control, especially for trade schools and private universities. College costs rose by 1,400% since 1978. That is five times more than the inflation rate over the same period.
  • Over–Borrowing: The easy ability that students have in many cases to over-borrow for living expenses on top of college costs means that they take bigger loans than they need and wastefully spend the money.

In the olden days, they had a phrase for a person who sold themselves into a kind of work-slavery. They called these people “indentured servants.” By taking out student loan debt that may take decades to pay back, this is a form of indentured servitude, especially because it is difficult, if not impossible to get out of paying the student loans back. Even bankruptcy does not discharge student loan debt.

If your student loan goes into default, there is the possibility of a wage garnishment, which means up to 25% of your take-home pay will be deducted from your checks and used to pay off the student loan debt. This is like a modern version of being an indentured servant.

But You Need A College Degree To Succeed, Right?

For many, earning a college degree that teaches skills and knowledge, which help get a high-paying job, is a reasonable idea. However, not all degrees are equal in their influence over getting a job. Many degree certificates are not worth the paper they are printed on. Moreover, some do better than those who have degrees.

Conclusion

What do Bill Gates, Coco Chanel, Ralph Lauren, Rachel Ray, Mark Zuckerberg, Sean “Diddy” Combs, James Cameron, Steve Jobs, Steve Wozniak, Richard Branson, Simon Cowell, Larry Ellison, Ted Turner, and Wolfgang Puck all have in common? They all do NOT have a college degree and still became immensely successful. Many are billionaires, who simply started their businesses and did not have time to finish college, so they dropped out.

Before you saddle yourself with student debt for a huge portion of the rest of your life, think carefully about the ramifications. Then, if you must borrow, borrow as little as possible and make sure you get a degree that helps get a high-paying job.

If you are in the market for a new home or interested in refinancing your current property, be sure to consult with your trusted home mortgage professional.