Bank of America Has a Waiting List to Refinance

Last updated on February 2nd, 2018

If you’re interested in refinancing your mortgage with Bank of America, you may be in for a big surprise.

Per Bloomberg, the mega bank has been unable to keep up with demand, thanks in part to HARP Phase II, which is beginning to roll out.

The program, which allows pretty much anyone to refinance, regardless of how deeply underwater they are, has led to everyone and their mother inquiring about a possible refi.

And we all know that the biggest names in the finance world will experience the biggest windfall.

Unfortunately, Bank of America has been making steady moves to get out of the mortgage world in recent times.

In fact, their share of the mortgage market has dwindled to little more than five percent, which is less than it held before it acquired Countrywide.

This is largely because they exited both the wholesale and correspondent mortgage businesses to focus on building relationships at the retail level.

90-Day Wait to Refinance

I hope you’re patient, because Bank of America is telling some customers who call during high volume periods of the day to make a reservation.

And once they do that, it could take anywhere from 60 to 90 days just to hear back. Even then, it’s unclear how much longer it will take to apply for a refinance, get the loan underwritten, and finally get it funded.

By then mortgage rates could rise, though that’s probably not too much of a concern. But in the mean time you’d still be stuck making higher monthly mortgage payments, which is clearly no good.

[Are mortgage rates going to stay low?]

If you do manage to “get in the door,” note that Bank of America also stopped offering cash out refinances last month.

So if you’re looking to tap your home equity, you’ll either have to try a HELOC or go elsewhere.

BofA Customers Don’t Need to Wait

That said, one of Bloomberg’s sources said those with Bank of America checking accounts, along with those who go to the bank in person, do not need to wait.

Still, you have to wonder about the bank’s urgency in getting your refinance application to the closing department.

If they’re overloaded, the turn times will surely be extremely high, which could put your time-sensitive mortgage application in danger.

This is all the more reason to shop around for your mortgage, as opposed to just going with the bank you know and “trust.”

If you’re only getting one mortgage quote, you’re doing yourself an injustice.

Be sure to contact several banks, along with a few mortgage brokers, to see what kind of mortgage rate you can get your hands on.

And don’t forget to compare fees and closing costs to ensure you receive the best deal on your refinance.

Tip: How to find the best mortgage rates.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Financial Planning Lessons Regular Folks Can Learn from Professional Athletes

Baseball season is in full swing now. While the finances of baseball players and other professional athletes are not quite the same as yours or mine, what can we learn from their financial challenges? A lot, according to a financial planner for players on three pro teams.

I interviewed Scott Morrison for his take on the financial curveballs he faces while working with his clients.  He’s the President of Pennant Asset Management and a financial planner for professional athletes on teams including the New York Mets, the Chicago White Sox and the Oakland Athletics. 

Hey, Big Spenders?

Matt Goren: What is the first impression people have when you say you work with professional athletes to help manage their finances?

Scott Morrison: Athletes often carry around the “dumb jock” stereotype that they want to blow all their money faster than they receive it. Does it happen from time to time? Unfortunately, yes. But what has surprised me most is that athletes are coming in more educated now than ever before – many are frugal and want to track every penny of where their paycheck goes.  

Matt Goren: Frugal athletes is definitely not my stereotype. Is this a baseball thing?

Scott Morrison: I think the sport definitely has something to do with it. In baseball, it usually takes a while to get to the major leagues after draft day. Minor league salaries and lifestyles are, to be kind, not very luxurious, so there is a very real concern about how they will survive financially until they get called up to the big leagues. It forces players to be smart and to make their money last.

Matt Goren: We hear about some giant contracts, but they’re not very common. More often, an athlete gets a signing bonus to join the team and maybe a short contract. Professional athletes don’t normally see the big dollars until their second deal – if ever.

Scott Morrison: With athletes, we often plan as if they aren’t going to make another cent on top of their signing bonus. If and when they do make it to the big leagues and sign multiyear contracts for multimillions, then the fun can really begin. But from the start, we have to protect their initial lump sum with the correct budgets and strategies.

Their Biggest Challenge May Sound Familiar

Matt Goren: What is the biggest challenge you encounter?

Scott Morrison: Taxes! One of their biggest concerns is the amount of tax they have to pay on their signing bonuses and then again in the future on their major league contracts. Players often overlook that this large lump sum isn’t as large as it first appears.

Matt Goren: And that’s a lesson for the rest of us: Our take-home pay after taxes is much less than our gross pay. What other challenges do they have? Do you see problems with overspending?

Scott Morrison: Ultra-luxurious items are the No. 1 spending problem I run into. Aside from the designer items – the Louis backpack, the Gucci wallet, the Yeezy’s, etc. – many newly drafted athletes want to buy the Porsche and the million-dollar-plus home all with their signing bonus. I go through the taxation presentation and then, all of a sudden, they get a lot more realistic.

To be sure, not every penny needs to go into the bank – but we need a realistic approach that considers their uncertain longevity on the field. Is the boat, car and house out of the question? Absolutely not! All I’m saying is, depending on the signing bonus, maybe one or two of those items can be shelved until they are making big league salaries.

Matt Goren: Like retirement savings nest eggs, I’m sure that on-the-field money can be multiplied with sound investments. What sorts of challenges do you see there?

Scott Morrison: The biggest mistake I find that young players make is not all that different than young professionals with their retirement savings – they don’t understand the concept of putting their money to work for them, and they think it’s OK to leave their money on the sidelines. Once they see how important and beneficial it is to have their money appropriately invested, they all say the same thing: “I wish I had started earlier.”

Some Interesting Investment Choices

Matt Goren: Are there certain types of investments that athletes ask you about?

Scott Morrison: I have found an obsessiveness around real estate. So many young athletes want to dig into the cryptocurrency world as well – it’s crazy!

I also get a lot of requests from my clients asking about getting involved with childhood friends’ or distant family members’ businesses. There is always a long-lost friend or cousin who comes out of the woodwork asking for an influx of cash into their business, and it’s important for athletes to be prudent when considering those investments.  

Matt Goren: Good that they found you, then. How do you usually meet your clients?

Scott Morrison: Being a former Division I baseball player, I understand many of the complexities they are dealing with. I’ve known some of my clients since before they became professional athletes. Ultimately, the reason clients choose an adviser is because of relatability and relationships. Players want to trust their money with someone who they feel comfortable with.

Matt Goren: If you need a “pitch” to your clients at all, what would that pitch be?

Scott Morrison: Utilize a professional financial adviser who understands your situation so we can put the right guardrails in place. By working with a professional, athletes can focus on their performance on the field and – to the extent it makes sense – enjoy their money now. They’ve worked hard for their money, and we want them to enjoy it! We also want to make sure that they don’t have to work another day once their career is over if they don’t want to!

The Bottom Line for Athletes and the Rest of Us

Matt Goren: And that, to me, sounds exactly like why so many everyday people work with a financial professional.Scott Morrison: Sure, the numbers change, but the strategies for the most part don’t – depending on the risk tolerance and suitability. Ultimately, we want to preserve our clients’ wealth not just for years to come, but for generations to come. It doesn’t matter if it’s a professional athlete or a business owner, or families and individuals, I want our clients to enjoy their hard-earned assets. But no matter who it is, we want to encourage intentional, smart decisions.

Matt Goren: Agreed – thanks, Scott, for your insights! To everyone reading, you don’t have to be a big-league player to make great plays with your money. Focus on the long term, invest for your future, and avoid the temptation to buy that new yacht. If you need some coaching and guidance, make sure to reach out to a professional financial planner who can help you reach those goals.

Assistant Professor of Financial Planning, The American College of Financial Services

Matt J. Goren is an Assistant Professor of Financial Planning at The American College of Financial Services who focuses on the interplay of personal finance and psychology. In addition to teaching and developing content, he provides strategic consulting on financial literacy initiatives and hosts a personal finance radio show, Nothing Funny About Money, which was named 2018’s most outstanding consumer financial information resource by the AFCPE.

Source: kiplinger.com

Understanding the Role of the Real Estate Agent

Not sure you need an agent to help with your real estate transaction? Here are seven ways they bring value you might be missing out on.

The road to homeownership can be bumpy, and it’s often filled with unexpected turns and detours. That’s why it makes sense to have a real estate pro help guide the way.

While real estate websites and mobile apps can help you identify houses you may be interested in, an experienced agent does much more, including:

1. Guide. Before you tour your first home, your agent will take time to learn more about your wants, needs, preferences, budget and motivation. A good real estate agent will help you narrow your search and identify your priorities.

2. Educate. You should expect your agent to provide data on the local home market and comparable sales. The home-buying process can be complicated. A good agent will explain the steps involved – in a manner that makes them understandable – and provide counsel along the way.

3. Network. An agent who is familiar with your target neighborhoods will often know about homes that are for sale – even before they’re officially listed. Experienced agents tend to know other agents in the area and have good working relationships with them; this can lead to smooth transactions. Your agent may also be able to refer you to trusted professionals including lenders, home inspectors and contractors.

4. Advocate. When you work with a buyer’s agent, their fiduciary responsibility is to you. That means you have an expert who is looking out for your best financial interests, an expert who’s contractually bound to do everything in their power to protect you. If you find yourself in a situation where the same agent represents both the buyer and seller, things can get trickier, advises Scottsdale, Arizona-based real estate agent Dru Bloomfield.

“A lot of people think they’ll get a lower price by going straight to the listing agent, but that’s always not true,” she says. “If I was representing both the buyer and seller, I’d be hard-pressed to take a low-ball offer to the seller. But, as a buyer’s agent I’d do it, because I have no emotional ties or fiduciary responsibility to the seller. Buyers should work with an agent who can fully represent them.”

5. Negotiate. Your agent will handle the details of the negotiation process, including the preparation of all necessary offer and counteroffer forms. Once your inspection is done, the agent can also help you negotiate for repairs. Even the most reasonable consumers can become distraught when battling over repair requests; an agent can do “the ask” without becoming overly emotional.

6. Manage minutia. The paperwork that goes along with a real estate transaction can be exhaustive. If you forget to initial a clause or check a box, all those documents will need to be resubmitted. A good real estate agent understands the associated deadlines and details and can help you navigate these complex documents.

7. Look out. Any number of pitfalls can kill a deal as it inches toward closing; perhaps the title of the house isn’t clear, the lender hasn’t met the financing deadline or the seller has failed to disclose a plumbing problem. An experienced real estate agent knows to watch for trouble before it’s too late, and can skillfully deal with challenges as they arise.

Professional real estate agents do so much more than drive clients around to look at homes. Find an agent you trust and with whom you feel comfortable working; you’re sure to benefit from their experience, knowledge of the local market and negotiation skills.

Related:

Originally published July 21, 2014.

Source: zillow.com

Chase Freedom Flex Now Works with Samsung Pay & Tap-To-Pay

Update 4/14/21: Reader TKB let us know that Freedom Flex can now be added to Samsung Pay. (Previously it was only working with Google Pay, Apple Pay, and tap-to-pay.)

Update 12/28/20: Reader TKB lets us know that it appears the Freedom Flex is now working with Tap-To-Pay technology.

Another update on 9/21/20: Readers say that you CAN add the card to a mobile wallet; it just doesn’t auto-update. Bottom line: the Flex card will work in mobile wallets, but will not work for tap-to-pay.

Update 9/21/20: Just an addition from reader H. – aside from not working with mobile wallets, the Freedom Flex card also does not work with tap-to-pay.

Original Post:

Multiple readers report being told that if they product change to the new Chase Freedom Flex card it won’t be available in mobile wallets. Readers have confirmed that after the product change, the old card gets deleted from your mobile wallet.

That’s a bummer. Some suggest this is due to being a Mastercard which Chase does not yet have the relationships to get it into mobile wallets (though IHG Mastercard does work in mobile wallet).

I’d expect Chase to work this out in the coming months. I’m honestly surprised they’d launch the product without working out such a kink since it gives people a bad taste about the new card. Hopefully they work it out quickly.

Source: doctorofcredit.com

10 Money Books for Children and Teens

Reading is one of the most valuable skills children learn. Not only does reading enable us to navigate the modern world, it provides an endless source of learning and entertainment.

I am incredibly thankful that all of my children are avid readers who love nothing more than to have a fresh new book in their hands, but over the years, I’ve learned that you can’t just toss any book at them and expect them to read it. They’re engaged by compelling stories and by things that match up well with their interests in the moment. They’re not immediately going to gravitate to a book about money unless it speaks to them in some way.

Why worry about it at all? The reality is that financial education is a big part of modern parenting. Many schools provide very little in terms of practical financial education, leaving it up to parents to prepare their children for this aspect of adult life, and it can be a real challenge.

There’s an abundance of great financial books for adults, but it’s harder to find great options for children that really hit the sweet spot of being age-relevant and interesting to them. Here are 10 options that manage to balance these two goals.

In this article

The Berenstain Bears’ Trouble with Money by Stan and Jan Berenstain is a wonderful picture book for read aloud time or for early independent readers. It tells a relatable story from the perspective of the two younger Berenstain Bears about the challenge of having limited amounts of money. Children are going to be familiar with the idea of not having enough money to buy the things that they want, but what do they do in that situation? This book handles it with care.

Another good financially minded book choice for preschool children is Curious George Saves His Pennies by H.A. Rey. It focuses on the challenge of having enough patience to save for a large goal without getting distracted, balanced with George’s colorful adventures and distractions.

Brock, Rock, and the Savings Shock by Sheila Bair and Barry Gott takes the idea of compound interest and makes it into an accessible children’s book with a lot of clever rhyming and beautiful illustrations. The book focuses on twin brothers, one of whom chooses to spend on momentary impulses while the other saves his money, leading to the end when the saving brother has a lot of money built up thanks to the compounding.

Another great choice for early elementary children is The Squirrel Manifesto by Ric and Jean Edelman and illustrated by Dave Zaboski. It’s a beautifully illustrated book that brings to mind the fable of the grasshopper and the ant, focusing on a parable involving a squirrel saving resources for the winter to come.

For upper elementary kids: Lunch Money

Lunch Money by Andrew Clements and illustrated by Brian Selznick tells a great story of a rivalry between two entrepreneurially minded children, but within the rollicking tale comes a lot of good ideas about working to earn money, the value of cooperation, investing in yourself, and putting aside money for the long haul. These ideas are really effortlessly weaved into the story.

An alternative choice is How to Turn $100 into $1,000,000 by James McKenna, Jeannine Glista and Matt Fontaine. While this isn’t story-oriented like many of the other selections here, the provocative title and the perfect approach for older elementary-age children who are beginning to have somewhat more expensive tastes make this a great choice for adolescents.

Money Hungry by Sharon Flake tells a very memorable story about a 13-year-old girl who seems obsessed with money, finding all sorts of ways to earn a dollar here and a dollar there. As the story progresses, it becomes clear that she’s driven by a fear of poverty and some painful memories of not having enough when she was younger. This book has spurned some wonderful conversations in our home about money, needs and how different people see those things differently.

Another really great option for middle schoolers is Katie Bell and the Wishing Well by Nephi and Elizabeth Zufelt, which takes something of an opposite approach to Money Hungry. Here, the titular character finds all of her financial wishes easily granted, but finds that it’s not all it’s cracked up to be and that much of what we think of as a wealthy life comes from other things, like relationships.

The Truth About Forever by Sarah Dessen is a beautiful story about a teenager with a summer job who is using that opportunity to both earn money and escape from some difficult life issues, particularly the death of a parent. The book intertwines money issues with the multitude of concerns and difficulties teens often face, resulting in a wonderful story with a great conclusion.

A completely different type of financial book that might just click with your high schooler is I Want More Pizza by Steve Burkholder and editors Rebecca Maizel and David Aretha. This is a nonfiction book, but it’s extremely applicable to and targets almost perfectly the financial concerns of high schoolers. Should they get a job? Should they be saving for college or for a car? It does a great job of addressing the exact questions I often hear from the high schooler in my home.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Blanket Mortgage Loans – Definition, Pros & Cons of Using for Real Estate

For real estate investors, juggling multiple property deals and loans can get complicated.

Blanket loans often help simplify matters. Borrowers take out a single loan to cover multiple properties.

Even so, blanket loans come with their own quirks and have their pros and cons. Before entering into a blanket loan as an investor, make sure you understand exactly what you’re getting yourself into.

What Is a Blanket Loan?

A blanket loan is simply one loan that attaches to several real estate investment properties.

For example, if you buy a portfolio of five properties, a blanket loan allows you to take out one mortgage that covers all five buildings. The lender attaches a lien against each property, so if you default on your loan, the lender can foreclose on all five properties to recover their money.

Lenders do typically include a release clause, allowing the borrower to sell individual properties held as collateral as part of a blanket loan. However, they require the borrower to either repay a portion of the loan at the time of sale or put the money toward another investment. The lender then attaches a lien to the new investment property as a replacement for the sold collateral property.

That keeps their collateral — your remaining properties secured by the blanket loan — sufficient to cover their loan risk.

Who Takes Out Blanket Loans?

Blanket mortgages are exclusively for real estate investors and developers, not homeowners.

Investors can use blanket loans in many ways to invest in real estate. Landlords can take out a blanket mortgage to buy a portfolio of turnkey rental properties, as outlined above. Flippers could do likewise, to buy several fixer-uppers to renovate and flip, all with one loan. As they sell off properties, they typically repay a proportion of their loan.

Real estate developers use blanket loans to buy large swaths of land that they plan to subdivide into many units. As they build and sell off those units, they can either repay portions of the loan or put the money toward adding more properties to the portfolio.

Businesses with multiple locations and commercial properties can also use blanket loans. That could mean refinancing multiple existing loans into one blanket loan, or using a blanket loan to buy several new locations in one sweep.

When You Should Use a Blanket Mortgage

As touched on above, you can either use a blanket loan at the time of purchase or you can refinance to consolidate multiple mortgages into one loan.

It makes sense to use a blanket loan at the time of purchase if you plan to buy multiple properties simultaneously. You may also be able to negotiate staggered funding if you buy multiple properties in rapid succession but not quite simultaneously.

Another possibility with blanket mortgages includes buying only one new property, but securing the loan against other properties you own for additional collateral. Real estate investors sometimes do this in lieu of making a down payment on the new property.

For example, say you own a property worth $100,000, but you only owe $50,000 on it. You want to buy another property for $100,000, and the lender demands a $20,000 down payment.

Rather than cough up the $20,000 in cash, you offer your existing property as additional collateral for the new mortgage loan. The lender agrees to fund the full $100,000 for you to buy your new property, but puts liens on both properties. They now hold the first (and only) lien against your new property, and they have a second lien against your old property.

Advantages of Blanket Loans

Blanket mortgages come with several upsides for real estate investors.

To begin with, they can save on lender fees and settlement costs by holding one combined closing rather than having to pay separately for several. Lenders charge flat fees in addition to points, and those flat fees add up quickly. Title companies also charge many flat fees for each closing. With blanket loans, borrowers can pay those flat fees once, rather than at each settlement.

Aside from saving money, combining financing for several properties into one loan can also keep your finances and cash flow simpler. Rather than keeping track of 20 mortgage payments and loans, you need only track one or two.

When buying new properties, blanket mortgages can potentially reduce or eliminate your down payment if you use equity from an existing property for a cross-collateralized loan. Consider it one more way to pull equity out of your properties — and one that doesn’t require a totally separate settlement with its attendant costs.

Larger loans often mean more negotiating room for you as the borrower as well. Lenders don’t need to charge as many points on a $1 million loan to make it worth their while, compared to five $200,000 loans. Similarly, borrowers can often negotiate lower interest rates as well.

Downsides of Blanket Loans

Blanket mortgages come with their share of risks and disadvantages.

To begin with, it can be hard to find lenders that offer these loans. Up to this point in your real estate investing career, you may have established relationships with two or three lenders — none of whom might offer blanket loans. That forces you to go out and build new relationships with lenders who do.

Expect more intensive scrutiny by the lender for these larger, more complex loans. Rather than using a garden variety underwriter, bank managers might underwrite these larger loans themselves. Lenders might ask more probing questions and require more extensive documentation and paperwork from you. They may require higher credit scores than their typical loan products.

Blanket loans often come with shorter loan terms than traditional mortgage loans. Rather than the 25- or 30-year loan terms you’re used to, lenders often limit blanket loans to 10 to 15 years. That could come in the form of a balloon payment, or the loan could be entirely amortized over those 10 to 15 years. In the case of short-term amortization, that means higher monthly payments.

Finally, blanket loans pool your risk for many properties into a single loan. If you default on that loan, you could lose all the properties secured by it to foreclosure, not just one. In contrast, if you hold separate loans for each property, in a crisis you could isolate your losses to one property as long as you can afford to make your other monthly payments.

Where You Can Borrow Blanket Loans

Conventional mortgage lenders don’t typically allow blanket loans. Commercial lenders, portfolio lenders — who keep loans on their own books rather than selling them — and hard money lenders often do allow them.

Make no mistake, these lenders usually charge more than your personal home mortgage lender. But they also allow far more flexibility, and as a real estate investor, that flexibility is often necessary.

Call up your local community banks to ask whether they offer blanket loans for real estate investors. You can also reach out to portfolio lenders such as Lending Home and Rental Home Financing to inquire about them. For commercial loans, make sure you choose a commercial lender, because even many portfolio lenders only handle residential (single-family and 2-4 unit multifamily) properties.

Word to the wise: start building these connections now, before you actually have a time-sensitive deal on the line. Real estate investors need to be able to move fast and close deals quickly, else they risk losing the deal entirely.

Final Word

The average mom-and-pop property owner with a couple units on the side of their full-time job will probably never need to take out large blanket loans. But for real estate developers and full-time real estate investors, blanket loans can help them scale their investment portfolios faster and cheaper.

Start expanding your network of lenders now, before you have a hot deal at risk of falling through. Think in terms of building a financing toolkit of many different options for buying your next investment property — or portfolio of properties.

Source: moneycrashers.com