Finance

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The debt-to-equity ratio is one of many financial metrics that helps investors determine potential risks when looking to invest in certain stocks. There’s a relatively simple calculation and formula investors can use to reach the ratio.

Companies also use debt, also known as leverage, to help them accomplish business goals and finance operating costs. The ratio used to measure this leverage is called the debt-to-equity ratio (D/E).

What Is the Debt-to-Equity Ratio?

The debt-to-equity ratio is one of several metrics that you can use to evaluate individual stocks. At its simplest, the debt-to-equity ratio is a measure of how much debt it takes for a company to run its business.

It compares a company’s equity — how much value is locked up in its shares — to its debts. Another way of looking at it is as a measure of a company’s ability to cover its debts. For example, if a company were to liquidate its assets, would it be able to cover its debt? How much money would be left over for shareholders?

Investors often use the debt-to-equity ratio to determine how much risk a company has taken on, and in return, how risky it may be to invest in that company. After all, if a company goes under and can’t cover its debts, its shares could wind up worthless.
💡 Quick Tip: When people talk about investment risk, they mean the risk of losing money. Some investments are higher risk, some are lower. Be sure to bear this in mind when investing online.

What Is Leverage?

To understand the debt-to-equity ratio, it’s helpful to understand the concept of leverage. A business has two options when it comes to paying for operating costs: It can either use equity, or they can use debt, aka leverage.

The company can use the funds from this debt to buy equipment, inventory, or other assets, or to fund new projects or acquisitions. It can also serve as working capital in cyclical businesses during the periods when cash flow is low.

While it’s potentially risky to use leverage — a company might have to declare bankruptcy if it can’t pay its debt — it can also help a company grow beyond the limitation of its equity.

The term “leverage” reflects the hope that the company will be able to use a relatively small amount of debt to boost its growth and earnings. Wise use of debt can help companies build a good reputation with creditors, which, in turn, will allow them to borrow more money for potential future growth.

The Debt-to-Equity Ratio Formula

Calculating the debt-to-equity ratio is fairly straightforward. A good first step is to take the company’s total liabilities and divide it by shareholder equity. Here’s what the debt to equity ratio formula looks like:

D/E = Total Liabilities / Shareholders’ Equity

Here’s a closer look at the two components of the equation:

Total Liabilities

This component includes a company’s current and long-term liabilities. Current liabilities are the debts that a company will typically pay off within the year, including accounts payable. Long-term liabilities are debts whose maturity extends longer than a year. Think mortgages on buildings or long-term leases.

Equity

The equity component includes two portions: shareholder equity and retained earnings. Shareholder equity is the money investors have paid in exchange for shares of the company stock. Retained earnings are profits that the company holds onto that aren’t paid out in the form of dividends to shareholders.

Debt-to-Equity Example

To look at a simple example of a debt to equity formula, consider a company with total liabilities worth $100 million dollars and equity worth $85 million. Divide $100 million by $85 million and you’ll see that the company’s debt-to-equity ratio would be about 1.18.

When using a real-world debt to equity ratio formula, you’ll probably be able to find figures for both total liabilities and shareholder equity on a company’s balance sheet. Publicly traded companies will usually share their balance sheet along with their regular filings with the Securities and Exchange Commission (SEC).

What Is a Good Debt-to-Equity Ratio?

Once you’ve calculated a debt-to-equity ratio, how do you know whether that number is good or bad? As a very general rule of thumb, a good debt-to-equity ratio will equal about 1.0. However, the acceptable rate can vary by industry, and may depend on the overall economy. A higher debt-to-income ratio could be more risky in an economic downturn, for example, than during a boom.

Recommended: Investing During a Recession

For example, if a company, such as a manufacturer, requires a lot of capital to operate, it may need to take on a lot of debt to finance its operations. A company like this may have a debt equity ratio of about 2.0 or more.

Other companies that might have high ratios include those that face little competition and have strong market positions, and regulated companies, like utilities, that investors consider relatively low risk.

Companies that don’t need a lot of debt to operate may have debt-to-equity ratios below 1.0. For example, the service industry requires relatively little capital.

What Does a Company’s Debt-to-Equity Ratio Mean?

A debt-to-equity-ratio that’s high compared to others in a company’s given industry may indicate that that company is overleveraged and in a precarious position. Investors may want to shy away from companies that are overloaded on debt. And not only that, companies with a high debt-to-equity ratio may have a hard time working with other lenders, partners, or even suppliers, who may be afraid they won’t be paid back.

In some cases, creditors limit the debt-to-equity ratio a company can have as part of their lending agreement. Such an agreement prevents the borrower from taking on too much new debt, which could limit the original creditor’s ability to collect.

It is possible that the debt-to-equity ratio may be considered too low, as well, which is an indicator that a company is relying too heavily on its own equity to fund operations. In that case, investors may worry that the company isn’t taking advantage of potential growth opportunities.

Ultimately, businesses must strike an appropriate balance within their industry between financing with debt and financing with equity.

What Does It Mean for a Debt-to-Equity Ratio to Be Negative?

There could be several reasons for a negative debt-to-equity ratio, including:

•   Interest rates are higher than the returns

•   A negative net worth (more liabilities than assets)

•   A financial loss after a large dividend payout

•   Dividend payments that surpass investor’s equity in the firm

So, what does this mean for investors?

Negative debt equity ratios may tell investors that the company indicates investment risk and shows that the company is not financially stable. Therefore, investing in such a company may result in a loss for investors.
💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.

Which Industries Have High Debt-to-Equity Ratios?

The depository industry (banks and lenders) may have high debt-to-equity ratios. Because banks borrow funds to loan money to consumers, financial institutions usually have higher debt-to-equity ratios than other industries.

Other industries with high debt to equity ratios include:

•   Non-depository credit institutions

•   Insurance providers

•   Hotels, rooming houses, camps, and other lodging places

•   Transportation by air

•   Railroad transportation

Effect of Debt-to-Equity Ratio on Stock Price

The debt-to-equity ratio can clue investors in on how stock prices may move. As a measure of leverage, debt-to-equity can show how aggressively a company is using debt to fund its growth.

The interest rates on business loans can be relatively low, and are tax deductible. That makes debt an attractive way to fund business, especially compared to the potential returns on the stock market. And sometimes an aggressive strategy can pay off.

For example, if a company takes on a lot of debt and then grows very quickly, its earnings could rise quickly. If earnings outstrip the cost of the debt, which includes interest payments, shareholders can benefit and stock prices may go up.

The opposite may also be true. A highly leveraged company could have high business risk. If earnings don’t outpace the debt’s cost, then shareholders may lose and stock prices may fall.

Having to make high debt payments can leave companies with less cash on hand to pay for growth, which can also hurt the company and shareholders. And a high debt-to-equity ratio can limit a company’s access to borrowing, which could limit its ability to grow.

Debt-to-Equity (D/E) Ratio vs the Gearing Ratio

The debt-to-equity ratio belongs to a family of ratios that investors can use to help them evaluate companies. These ratios are collectively known as gearing ratios.

Here’s a quick look at other gearing ratios you may encounter:

Equity Ratio

This ratio compares a company’s equity to its assets, showing how much of the company’s assets are funded by equity.

Debt Ratio

This looks at the total liabilities of a company in comparison to its total assets. On the surface, this may sound like the debt ratio formula is the same as the debt-to-equity ratio formula. However, the total debt ratio formula includes short-term assets and liabilities as part of the equation, which the debt-to-equity ratio discounts. Also, this ratio looks specifically at how much of a company’s assets are financed with debt.

Time Interest Earned

This ratio helps indicate whether a company has the ability to make interest payments on its debt, dividing earnings before interest and taxes (EBIT) by total interest. Most of the information needed to calculate these ratios appears on a company’s balance sheet, save for EBIT, which appears on its profit and loss statement.

How Businesses Use Debt-to-Equity Ratios

Businesses pay as much attention to debt-to-equity as individual investors. For example, if a company wants to take on new credit, they would likely want their debt-to-equity ratio to be favorable.

Banks and other lenders keep tabs on what healthy debt-to-equity ratios look like in a given industry. A debt-to-equity ratio that seems too high, especially compared to a company’s peers, might signal to potential lenders that the company isn’t in a good position to repay the debt.

Publicly traded companies that are in the midst of repurchasing stock may also want to control their debt-to-equity ratio. That’s because share buybacks are usually counted as risk, since they reduce the value of stockholder equity. As a result the equity side of the equation looks smaller and the debt side appears bigger.

How Can the Debt-to-Equity Ratio Be Used to Measure a Company’s Riskiness?

While acceptable debt to equity ratios vary by industry, investors can still use this ratio to identify companies in which they want to invest. First, however, it’s essential to understand the scope of the industry to fully grasp how the debt-to-equity ratio plays a role in assessing the company’s risk.

Many companies borrow money to maintain business operations — making it a typical practice for many businesses. For companies with steady and consistent cash flow, repaying debt happens rapidly. Also, because they repay debt quickly, these businesses will likely have solid credit, which allows them to borrow inexpensively from lenders.

Therefore, even if such companies have high debt-to-equity ratios, it doesn’t necessarily mean they are risky. For example, companies in the utility industry must borrow large sums of cash to purchase costly assets to maintain business operations. However, since they have high cash flows, paying off debt happens quickly and does not pose a huge risk to the company.

On the other hand, companies with low debt-to-equity ratios aren’t always a safe bet, either. For example, a company may not borrow any funds to support business operations, not because it doesn’t need to but because it doesn’t have enough capital to repay it promptly. This may mean that the company doesn’t have the potential for much growth.

IPOs and Debt-to-Equity Ratios

Many startups make high use of leverage to grow, and even plan to use the proceeds of an IPO to pay down their debt. The results of their IPO will determine their debt-to-equity ratio, as investors put a value on the company’s equity. So, it’s important for investors to consider debt when deciding whether they want to buy IPO stock.

The Limitations of Debt-to-Equity Ratios

Debt-to-equity ratio is just one piece of the puzzle when it comes to evaluating stocks. Whether the ratio is high or low is not the be all and end all of whether one should invest in a company. A deeper dive into a company’s financial structure can paint a fuller picture.

A company’s accounting policies can change the calculation of its debt-to-equity. For example, preferred stock is sometimes included as equity, but it has certain properties that can also make it seem a lot like debt. Specifically, preferred stock with dividend payment included as part of the stock agreement can cause the stock to take on some characteristics of debt, since the company has to pay dividends in the future.

If preferred stock appears on the debt side of the equation, a company’s debt-to-equity ratio may look riskier. If it’s included on the equity side, the ratio can look more favorable.

In some cases, companies can manipulate assets and liabilities to produce debt-to-equity ratios that are more favorable. Additionally, investors may want to keep an eye on interest rates.

If they’re low, it can make sense for companies to borrow more, which can inflate the debt-to-equity ratio, but may not actually be an indicator of bad tidings. Finally, the debt-to-equity ratio does not take into account when a debt is due. A debt due in the near term could have an outsized effect on the debt-to-equity ratio.

As a result of temporary imbalances like these, investors may want to compare debt-to-equity ratios from various time periods to get an idea of a company’s normal wage, or whether fluctuations are signaling more noteworthy movement within the company.

The Takeaway

Investors can use the debt-to-equity ratio to help determine potential risk before they buy a stock. As an individual investor you may choose to take an active or passive approach to investing and building a nest egg. The approach investors choose may depend on their goals and personal preferences.

Investors who are comfortable with a passive, hands-off approach may want to invest through index funds, or exchange-traded funds, which provide a diversified portfolio through a basket of investments. Investors who want to take a more hands-on approach to investing, choosing individual stocks, may take a look at the debt-to-equity ratio to help determine whether a company is a risky bet.

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Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

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Home Equity, DPA, Servicing, Database Mining, Warehouse Products; Underwriting Best Practices

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Home Equity, DPA, Servicing, Database Mining, Warehouse Products; Underwriting Best Practices

By:
Rob Chrisman

Fri, Jul 28 2023, 10:56 AM

Mortgages are only part of our lives, right? I only know what I read online, although Abraham Lincoln once said, “Don’t believe everything you read on the internet.” Before you fly down the freeway on a summer vacation, I also know that I have received my fair share of speeding tickets. (For those of you who haven’t, it’s a “punch in the gut” feeling to see that red light in the rear-view mirror. I’ve been able to talk them out of… none.) In something that smacks of Big Brother watching all the data, apparently 9 percent of drivers had a speeding ticket in 2022. Those drivers probably knew the speed limits, but in case you’d like a map of worldwide speed limits, here you go. (Thank you to Carol K.!) The official FHFA 2024 loan limits won’t be out until around Thanksgiving, of course, but in terms of inventions there is no limit on innovation. Face it: there isn’t a lot of innovation in lending. Sure there are tweaks when it comes to programs and pricing, but in the builder world, printed homes continue to progress. Do you have a program for them, or are they no big deal? (Today’s podcast can be found here and sponsored by ReadyPrice, offering the industry’s most powerful universal delivery portal that gives brokers the edge they need. Shop, lock and deliver with multiple lenders, all in one place, for free! Hear an interview with Polunsky Beitel Green’s Marty Green on the latest Fed rate hike and what it means for mortgage rates and affordability going forward.)

Lender and Broker Products, Services, and Software

Making an impact with social media can be daunting. To succeed, you’ll need to narrow your scope. Your clients and prospects need information from you about changes in the market and tips about getting mortgages. Your Realtors need steady advice on what’s going on in the industry. Position yourself as a thought leader. By and large, you’ll find people who need what you offer on Facebook and LinkedIn. Then, as in Marketing 101, you need enough frequency and ongoing regularity when posting. At Usherpa, they know social media can become a full-time job. Which is why Usherpa has automated 100% of the writing of compelling content and posting regularly for you. Usherpa is designed to help you create social media impact automatically. Check it out here. Download 3 Tips for Social Media Success.

Are you a broker or lender seeking to help customers realize the dream of homeownership and grow your business? Partner with Ameris Bank for your warehouse lending needs, and we’ll ensure you receive the resources, support, and service you need to close loans and grow your business. In fact, our warehouse customers have one-on-one access to specialty treasury management professionals who offer tailored financial solutions for their business. With Warehouse lines of credit ranging from $1.5 million to $150 million, we offer competitive interest rates, low fees, and industry-leading technology to our customers. Contact Jill Gainer or Jessica Lapresi to learn why their clients trust Ameris Bank for their Warehouse lending needs and how we can help your business grow in today’s market.

Last week, a Kentucky man discovered $1 million in Civil War-era gold coins buried in his cornfield. With TrustEngine’s Borrower Intelligence Platform, mortgage lenders can unearth hordes of buried loans from their databases. To give the industry insight into where lenders have been able to strike gold over the last quarter, TrustEngine has released its highly anticipated Q2 Mortgage Market Opportunities report. One striking report highlight is that New Listing Alerts, which signal when a contact has put their home on the market, were up 26.23% over Q1. Read TrustEngine’s Q2 MMO Report for more insights.

Servicing-Related Products

As lenders adapt to volatile mortgage rates, many are stopping to reconsider their servicing strategy. Do inconsistent mortgage origination volumes have you questioning what makes more sense: retaining servicing or selling servicing released? Seth Sprague, CMB, Richey May’s Director of Mortgage Banking Consulting Services (aka, resident servicing expert), outlines the 13 key trends and strategies in servicing including recommendations on how to make the right decisions for your business. Want more help defining the optimal strategy? You know where to find us: [email protected].

Is the size of your servicing portfolio or worries about your counterparty risk getting in the way of getting the best bulk MSR execution & pricing? With investor buyback demands increasing, Blue Water clients could benefit from additional protection that supports the purchase, sale, and onboarding of 1000’s of loans a month through our SuperTransfer™ platform. Reduce potential buybacks and solve issues around asset quality in purchase and or sale with an all-digital, all loan file solution! Our post close QC platform allows sellers or investors in bulk MSR and/or loans to review 100% of every loan file in a bulk package. It’s an all-digital solution that is efficient. Finally, our process is insured1! Connect with our Veteran Sales Team today and see how Blue Water can save you time, money, and headaches. (1)Policy Summary & pricing available on request. BWFTS is not an insurance provider, broker, or underwriter. The RWI policy is sold and underwritten by unaffiliated, licensed third party insurance providers for the benefit of Subscriber and all premiums are passed through to such licensed third-party insurance providers.

TPO Products

California! Announcing the NEW Golden Opportunities Down Payment Assistance Program, now available from Golden State Finance Authority (GSFA). Featuring assistance up to 5% of the First Mortgage Loan to be used towards down payment and/or closing costs on a 30-year fixed-rate FHA, VA, or USDA mortgage in California. Borrowers don’t have to have perfect credit (FICOs as low as 620 are eligible) and DTIs up to 55% can qualify. Best of all, there is no first-time homebuyer requirement. Join us for a Lender Training on Golden Opportunities and start helping more homebuyers Achieve the Dream. For more info visit the website and follow us on Facebook, LinkedIn or our YouTube channel.

Looking for great Home Equity Loan options for your clients? Rocket Pro TPO’s Home Equity Summer Sizzle provides significant savings for a limited time by waiving the $795 origination fee through August 6th! With home values still at historic highs, this limited-time offer can help your clients meet their financial goals without refinancing. Whether they’re looking to pay down expenses, consolidate debt or pay for home renovations, the choice is theirs. The best part about it? They can do it while maintaining the lower interest rate on their current mortgage. See the promotion disclaimer for more information here. Also, Rocket Pro TPO wants to see you at the biggest industry event of the year: Originator Connect in Las Vegas! EVP, Fawaz, will deliver an important keynote and you’ll hear from other industry pros. Register for free by using code ROCKETFREE. Interested in learning more about a Broker or Non-Delegated Correspondent partnership? Contact Rocket Pro TPO to learn more.

Lender and Investor News

Sometimes lender news doesn’t fall into buckets of conventional conforming, government, or non-Agency news. Let’s take a random look at who’s doing what.

SoFi was named “Best Lender for Saving Money” by CNBC Select in 2023, apparently in part due to its low down payment options, as little as 3-5 percent, but also its guaranteed “Close on time” program via a dedicated Mortgage Loan Officer. “Homebuyers can earn a $1,000 cash bonus, dropped into your SoFi Checking and Savings or SoFi Money® account to help with the housewarming party. Life is better when you’ve got a $1,000 cash bonus¹ to burn, contact SoFi for details.”

loanDepot, Inc. has delivered more than $1 million in cash-back rebates to customers through its mellohome Grand Slam program. The Grand Slam package was designed to simplify the home buying and selling experience, giving customers access to a suite of home transaction products in a single package that includes real estate and mortgage, all while making home ownership more affordable through a cash-back incentive. Grand Slam customers receive access to the dedicated mellohome concierge service team, who help customers navigate each step of the home buying or selling process, connecting customers with loanDepot loan officers for mortgage loan pre-approvals and reliable real estate agents to find a new home, sell their existing home, or both.

Citizens Correspondent National Bulletin 2023-14 provides information on Top Underwriting and Documentation Errors.

PHH released Announcement 2023-151: Underwriting Best Practices. “To reduce the Underwriting time frame and ensure a smooth process on your non-Delegated submissions, Sellers should review the Best Practices outlined below. Following these tips will lower the number of conditions on your loan and shorten the overall turn time. Ensure the required documents are included in your initial credit file: Loan registration reflects the correct property type and attachment type o Initial and signed URLA, most updated AUS findings, tri-merged credit report o FHA Case Number assignment (FHA only), income documentation as identified in the AUS, asset documentation as identified in the AUS – including all pages of statements or gift documentation, credit inquiry letter if the credit report shows inquiries within last 90 days, documentation of housing payment on any retained properties, and processor cert or explanation of any unique situation on the loan.

“Communicate your closing date or commitment/contingency date to your dedicated Correspondent Specialist. When submitting conditions or trailing documents, upload the documentation to the specific condition. Do not provide one PDF with all conditions. Allow sufficient time for conditions to be reviewed, at least 5 days prior to CTC (when possible). Review the comments from the Underwriter on Rejected conditions. Prior to purchase conditions should be sent within the Closed Loan file. Underwriters will not review Prior to Purchase conditions. As a reminder, the Non-Delegated Submission checklist can be found in the Resources section of the PHH Correspondent Lending Website under Tools and Forms.”

Capital Markets

We had a big day of selling in the bond markets yesterday after a much better than expected advance GDP report for Q2 (actual 2.4 percent, expected 1.6 percent), which gives the Fed another argument to hold rates in restrictive territory for longer. On Wednesday, the Federal Open Market Committee (FOMC) raised its target range for the fed funds rate by 25 basis points to the highest level since 2001, as expected, and left the door open to additional increases. Accordingly, investors have once again wagered that the Fed has reached the end of its tightening campaign and market participants are once again calling the Fed’s bluff, unwinding bets that the FOMC will tighten further in 2023. The official inflation rate of 3 percent is artificially low because when omitting volatile food and fuel costs, the true rate remains closer to 5 percent.

Can the Fed continue to cool inflation without a big increase in unemployment? Supply chain snarls have eased, and the strong labor market, which helped drive up prices, seems to be cooling. Fed Chair Powell, in his post-hike press conference, remained tight-lipped, admitting that higher borrowing costs are starting to chip away at inflation, while reminding markets that core-inflation remains too high and that the Fed’s policy moving forward would continue to be data dependent. It’s a tough balancing act: the tight labor market has drawn more low- and moderate-income earners into work and helped them earn livings/raises, but inflation has had an outsized impact on their finances, making it relatively harder for them to purchase goods and services than upper class individuals. Persistently high spending could be a reason for future rate increases.

Yesterday’s batch of data, including the above-consensus Q2 GDP that showed the U.S. economy was a long way from a recession in the second quarter, also showed that June Durable Orders (actual 4.7 percent, expected 1.0 percent) increased beyond expectations, and there was an unexpected decrease in weekly jobless claims to 221k, the lowest level since February. The solid batch of data kept Treasuries under selling pressure throughout the day, while a soft $35 billion 7-year note offering provided some additional encouragement for the selling. We also learned that, per the National Association of Realtors, pending home sales increased 0.3 percent in June versus May, as contract signings increased in the Northeast and Midwest but decreased in the South and West.

Today’s economic calendar includes June personal income and spending (+.3 percent and +.5 percent, respectively) as well as Q2 employment costs (+1.0 percent). Expectations were for income and spending to increase 0.4 percent and 0.1 percent month-over-month, respectively, versus 0.4 percent and 0.1 percent previously. The Core PCE Price Index was +4.1 percent versus expectations of +4.2. Later this morning brings final July Michigan sentiment. We begin the day with Agency MBS prices better about .125, the 10-year yielding 3.95 after closing yesterday at 4.01 percent, and the 2-year at 4.85: not a big reaction to the numbers.

Jobs

“Keith McKay, CEO of Prime Choice Funding, invites you to participate in reshaping the mortgage industry. Our mission for 2023 is to become the top mortgage broker in the nation. Join our team and expand your professional horizon with our diverse loan programs, flexible compensation plans, and a unique opportunity to earn extra by offering solar solutions to your clients. Backed by comprehensive marketing resources, cutting-edge platform, and robust operations support, your potential for growth is limitless. With a history dating back to 2007, Prime Choice represents stability and innovation in finance and sustainability. Register for our webinar today and explore these rewarding opportunities.”

“’One of the most exciting parts of my day as an LO was getting ‘CTC’, especially when it happens well before it is needed or expected,’ stated Randell Gillespie, EVP, National Sales Manager for Thrive Mortgage. ‘Why Thrive’ centers on the client experience, and it starts with delivering for our clients… ALWAYS! In tough markets, this also means you need additional options for your clients and referral sources, or as we say, “Always Options,” which is our way of delivering value through tailoring our offerings based on client needs. Recently we rolled out four new product options, including additional zero-down programs, payment-lowering options, and a ‘trigger lead eliminator.’ Our team will get through these tough times with more CTCs! At Thrive, CTC also means Communication, Transparency, and Collaboration as we Thrive together. If you want to THRIVE in these times, visit us here. Let’s keep making this industry better than we found it!”

“At Fairway Independent Mortgage Corporation, customer service is a way of life. #FairwayNation mortgage loan officers are dedicated to finding great rates and loan options for our customers while offering some of the fastest turn times in the industry. Our goal is to act as a trusted mortgage advisor, providing highly personalized service and helping you through every step of the loan process, from application to closing and beyond.”

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Source: mortgagenewsdaily.com

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Mauricio Umansky‘s residential brokerage The Agency is venturing into core services.

Through partnerships with Bubble Insurance Solutions and New American Funding, real estate agents at The Agency will have access to mortgage lending services and insurance services for their clients.

With Bubble Insurance Services, The Agency is launching its own affiliate insurance service, Agencia Insurance Solutions, which will serve new and past The Agency clients in California and Arizona. Through Agencia Insurance Solutions, agents will be able to offer clients access to flexible online home, auto and life insurance options.

The affiliation will provide The Agency’s agents with access to Bubble Insurance’s insurance coverage for their clients. The firm said the association aims to help homebuyers make more informed decisions by providing them with data-based insights into the risks associated with their home and neighborhood. These insights will be provided by Bubble Insurance’s patent-pending AI-based guidance system, HomePal, which uses data to match the most common environmental hazards for a property with the right policies and the right coverages for homeowners.

“Bubble’s AI-based shopping engine is specially crafted to integrate into home purchase and ownership flows to enable quick and smart insurance purchase,” Avi Gupta, the founder and CEO of Bubble Insurance, said in a statement. “Our one-stop insurance shop model is designed to give homeowners peace of mind and protect their investment, no matter what life throws their way.”

Through The Agency’s partnership with New American Funding, the mortgage lender will serve as The Agency’s preferred mortgage lender partner.

“We’re thrilled to officially announce our partnership with New American Funding,” Burke Smith, the executive vice president of affiliated businesses at The Agency, said in a statement. “Expanding our core real estate services with like-minded partners empowers our agents to provide their clients with best-in-class service and guidance throughout the entire transaction process.”

NAF offers numerous home financing options including conventional, jumbo, non-QM, as well as others. The Agency said that the partnership provides their agents with greater control over the transaction and enables them to offer better customer service to clients.

In 2023, The Agency ranked as the No. 18 brokerage in the country in the RealTrends 500 after reporting a total sales volume of $10.997 billion in 2022.

New American Funding ranked as the 31st largest mortgage lender in America for the first half of 2023, according to Inside Mortgage Finance data. The California-headquartered lender originated $4.69 billion in mortgage loans in the first half of the year.

Source: housingwire.com

Apache is functioning normally

Mauricio Umansky‘s residential brokerage The Agency is venturing into core services.

Through partnerships with Bubble Insurance Solutions and New American Funding, real estate agents at The Agency will have access to mortgage lending services and insurance services for their clients.

With Bubble Insurance Services, The Agency is launching its own affiliate insurance service, Agencia Insurance Solutions, which will serve new and past The Agency clients in California and Arizona. Through Agencia Insurance Solutions, agents will be able to offer clients access to flexible online home, auto and life insurance options.

The affiliation will provide The Agency’s agents with access to Bubble Insurance’s insurance coverage for their clients. The firm said the association aims to help homebuyers make more informed decisions by providing them with data-based insights into the risks associated with their home and neighborhood. These insights will be provided by Bubble Insurance’s patent-pending AI-based guidance system, HomePal, which uses data to match the most common environmental hazards for a property with the right policies and the right coverages for homeowners.

“Bubble’s AI-based shopping engine is specially crafted to integrate into home purchase and ownership flows to enable quick and smart insurance purchase,” Avi Gupta, the founder and CEO of Bubble Insurance, said in a statement. “Our one-stop insurance shop model is designed to give homeowners peace of mind and protect their investment, no matter what life throws their way.”

Through The Agency’s partnership with New American Funding, the mortgage lender will serve as The Agency’s preferred mortgage lender partner.

“We’re thrilled to officially announce our partnership with New American Funding,” Burke Smith, the executive vice president of affiliated businesses at The Agency, said in a statement. “Expanding our core real estate services with like-minded partners empowers our agents to provide their clients with best-in-class service and guidance throughout the entire transaction process.”

NAF offers numerous home financing options including conventional, jumbo, non-QM, as well as others. The Agency said that the partnership provides their agents with greater control over the transaction and enables them to offer better customer service to clients.

In 2023, The Agency ranked as the No. 18 brokerage in the country in the RealTrends 500 after reporting a total sales volume of $10.997 billion in 2022.

New American Funding ranked as the 31st largest mortgage lender in America for the first half of 2023, according to Inside Mortgage Finance data. The California-headquartered lender originated $4.69 billion in mortgage loans in the first half of the year.

Source: housingwire.com

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Three years ago, I decided to get out of debt. I hit the books, reading one personal finance title after another, searching for answers. Two books — Your Money or Your Life and The Total Money Makeover — were perfect for my situation. They gave me the tools I needed to tackle my problems. Now I’ve found a third book that would have been useful at the start of my journey to financial freedom.

All Your Worth: The Ultimate Lifetime Money Plan, published in 2005, was written by the mother-daughter team of Elizabeth Warren and Amelia Warren Tyagi. These women don’t get bogged down in the details of frugality and investing. They’re more interested in changing behavior, in fixing the big stuff. They offer a framework around which the reader can build lasting financial success.

A Balanced Budget

Though Warren and Tyagi would have you believe that their system is different from anything that’s ever been published, it’s not. It puts a different spin on things sometimes, but ultimately their advice is similar to that found in most other solid personal finance books. All Your Worth is about creating a budget.

So what is the secret to riches? Why do some people get ahead, while others constantly struggle? Our research led us to a very simple and incredibly powerful financial principle that you won’t hear anywhere else — balance…When your money is in balance, you always have enough to pay your bills, have some fun, and save for your dreams.

When the authors write about balance, they’re writing about budgets. In order to succeed financially, Warren and Tyagi believe you need keep three broad areas of your finances “in balance”. They say to:

  • Allocate 50% to Needs (which the authors call Must-Haves). Needs include housing, transportation, groceries, insurance, and clothes you really need.
  • Spend 30% on Wants. Wants include cable television, clothing beyond the basics, restaurant meals, concert tickets, comic books, knitting supplies, etc.
  • Set aside 20% for Savings, including debt repayment.

Warren and Tyagi want you to save a lot and have fun. To achieve this, they encourage you to reduce your Needs. In fact, this is the cornerstone of their advice.

Needs: Count the Dollars, Not the Pennies

Unlike many personal finance authors, Warren and Tyagi tend to be anti-frugality. They don’t believe that is pays to skimp on the things that bring you pleasure. They advocate saving money on the most expensive things so that you can still afford your morning coffee.

Here’s a little secret that other financial books won’t tell you: Savvy money managers don’t spend a lot of time looking for ways to save a few pennies. They charge right ahead to the big-ticket items, looking to make high-impact changes in the shortest period of time. They don’t sweat the small stuff. And neither will we.

Warren and Tyagi believe that most people get the big stuff wrong, and that if this can be corrected, then quick and drastic improvements can be made. They don’t think you should shop for generic toothpaste, rinse out your ziploc bags, or make your own laundry detergent — they think you should focus your attentions on getting the most favorable mortgage possible (on a house you can actually afford), ditch long-term contracts, and look for ways to save on other big-ticket items.

If you can get the big stuff right, if you can cut your costs on your Needs, then you should be able to reduce spending in this area to below 50% of your take-home pay. If you blow your budget here, though, it makes everything else more difficult. Suddenly you don’t have enough money to save or to purchase the things you want.

Wants: If You Can’t Afford Fun, You Can’t Afford Your Life

If you’re practicing balanced spending for your Needs, the All Your Worth plan allows you to spend 30% of your take-home pay on whatever you want. Do you want to eat out ever night? Do you want to buy comic books? Do you like to have a closet full of shoes? Have you been wanting to take a trip to Italy? Do you long for a deluxe widescreen high-def plasma television with 250 channels? Whatever you want, you can have, as long as you don’t spend more than 30% of your money on it.

Warren and Tyagi say that you shouldn’t worry about what you buy with your Wants money — you should worry about how you spend it. People get into trouble when they pursue their Wants without regard to the other aspects of a balanced financial life. To keep from danger, the authors suggest:

  • Set clear limits. Stick to your budget. Know how much you can afford to spend on your Wants and do not exceed this amount.
  • Use cash. Cash will prevent you from overspending, and will safeguard against problems with credit cards. One way to make this work is to withdraw your 30% Wants budget in cash at the start of every month. When the cash runs out, you’re done with your Wants.
  • Beware of emotional spending. I wrote about compulsive spending a couple weeks ago. Warren and Tyagi warn that this sort of behavior can throw things out of balance.

In many ways, allocating 30% to Wants is revolutionary. I’ve looked at a number of suggested budgets lately, and none of them allocates this much for fun. So long as you keep other aspects of the All Your Worth plan in balance, you really can have this much to spend as you please.

Savings: Build Your Dreams a Little at a Time

The final step in the All Your Worth plan is to save and invest 20% of the money you earn. Despite the authors’ claim that they couldn’t find any other good personal finance books, they seem to have cribbed this portion of their plan directly from Dave Ramsey. They recommend the following steps for your saving and investing budget:

  1. Save a $1,000 emergency fund.
  2. Repay your debt, starting with the debt that bothers you most.
  3. Bolster your emergency fund to cover six months of Needs.
  4. Begin saving and investing for wealth.

Once your debt is repaid and you have set aside money for emergencies, you should begin investing for your future. The authors divide the 20% Savings budget as follows:

  • Save for retirement by investing in index funds. (10%)
  • Pay down your mortgage (or save for a home). (5%)
  • Save for other goals, such as purchasing a car or taking a vacation. (5%)

I like this idea, and intend to use it myself, but with some modifications. For example, in 2008, Roth IRA contribution limits rise to $5,000. That’ll be more than 10% of my monthly take-home pay, so my retirement contribution percentage will be higher than the All Your Worth plan.

Conclusion

The book fleshes out each of these ideas in greater detail, and includes chapters on buying a home, relationships and money, and “financial CPR” — how to handle things when times get rough.

I like All Your Worth. Its advice is solid. It does a great job of looking at the Big Picture, allowing each reader to fill in the details. But the book does have some flaws:

  • I don’t like the repeated condemnation of frugality and thrift. I think they’re important.
  • The authors claim their advice is different from other personal finance books, but it’s not. Their advice is excellent but it is not new.
  • Warren and Tyagi sometimes make wild assumptions, such as a 12% annual stock market return.

These problems aren’t severe — just annoying.

If you’re struggling with debt and looking for a plan to get things right, then borrow this book from your public library. For those who complain that most financial advice — including that at Get Rich Slowly — is geared too much at the middle-class, and isn’t appropriate for those who earn less and who are struggling, All Your Worth may offer some answers.

Source: getrichslowly.org

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Jeff Yeager calls himself the Ultimate Cheapskate. He’s serious about saving money. He’s the sort of guy who soft-boils his morning eggs by putting them in the dishwasher while it runs. In a package he sent me recently, he included his business card, which is simply a rubber stamp printed on a piece of a brown paper bag. His wife calls him the cheapest man in America, and he’s proud of it.

The road map to true riches
Yeager has a new book called The Ultimate Cheapskate’s Road Map to True Riches, in which he preaches the virtues of frugality and the dangers of mass consumption. Before the first chapter, he offers a statement of purpose:

Living on less is a good thing to do. It’s the only financial advice that will work for almost everyone. It’s about a quality of life that you cannot buy, a sense of satisfaction you cannot fake, and an appreciation for others that gives life value. It’s also about helping save the planet and sharing with those in need. Living on less can be funny, but it’s no joke.

That short paragraph summarizes Yeager’s approach to personal finance. He may be cheap, but he has fun with it. In fact, this is the first personal finance book I’ve read that is truly funny. Andrew Tobias has moments of humor, but this book is funny throughout. (Some of Yeager’s humor is rated PG-13, though. If mild swearing and occasional orgasm references bother you, be warned.)

Six golden rules to ruling your gold
Yeager believes that most Americans are caught in a vicious cycle: They earn money to spend money to buy what they want. They never have enough. The key, he says, is to “slay your enoughasauraus“, that nasty monster inside each of us that makes us want just a little more.

His first step is to practice a “fiscal fast”. Live for a week without spending money. Take notes on what it’s like to go seven days without spending: what were you tempted to buy and how did it make you feel? From there, you can move on to his “six golden rules for ruling your gold”:

  1. Live within your means at thirty, and stay there. I’ve often wished that I had maintained the standard of living I had at 25. Instead, I got caught up in lifestyle inflation. If I’d had the willpower early, I could have a lot saved by now!
  2. Never underestimate the power of not spending. In The Wealthy Barber, David Chilton notes that a penny saved is worth more than a penny earned. An after-tax penny is actually worth about a penny-and-a-half of income. It’s worth even more when you consider the returns you miss by not investing it.
  3. Discretion is the better part of shopping. You know all those money hacks I share to trick yourself while shopping? Here’s where they come into play. Establish a 30-day waiting period before making big purchases. Always ask, “Is this a want or a need?” I like one of Yeager’s suggestions: Carry a “what the hell was I thinking?” list in your wallet or purse on which you’ve written all the stupid things you’ve purchased over the years. (Mine would be too big for my wallet!)
  4. Do for yourself what you could have others do for you. Grow your own food. Change your own oil. Do your own home maintenance. By taking on a few chores you usually pay others to do, you can save money.
  5. Anyone can negotiate anything. Daiko recently wrote that we should ask for a better financial future, requesting better deals when we deal with big companies. Bartering can save you money, too.
  6. Pinch the dollars, and the pennies will pinch themselves. This is the message that Elizabeth Warren preaches: limit your spending on the big things (like your mortgage), and you won’t have to worry so much about saving money on groceries. It’s best to be frugal in all aspects of your life, but pay particular attention to the big stuff.

There’s a lot more to The Ultimate Cheapskate’s Road Map to True Riches. Yeager covers topics like:

  • Eating well for cheap. (Yeager tries to buy food that costs less than a dollar per pound.)
  • Buying a sensible home and then repaying the mortgage as soon as possible.
  • Commuting without a car.
  • Cheap entertainment. Yeager encourages readers to make the most of their hobbies.

Ultimately, the message of this book is that stuff will not make you happy. Happiness comes from knowing when you have enough. In his final chapter, Yeager stresses the importance of amassing a quality of life over a quantity of stuff. “Many choices you must make [involve] the trade-off between money and time,” he writes. “By being cheap…you’re valuing time and the things you can do with it more than money and the things you can buy with it.”

Conclusion
This book was actually less about frugality and thrift than I expected. When I started reading, I thought there would be practical tips along the lines of The Tightwad Gazette and Your Money or Your Life. Yeager does share frugal ideas in sidebars scattered throughout the book’s 225 pages, but most of the information here is straight-up personal finance advice with an emphasis on pinching pennies. (That’s not a bad thing — it’s just not what I was expecting.)

I admire the way Yeager draws together a wide variety of sources. Too often, personal finance writers seem to live in a vacuum. You can read an entire Suze Orman book and never see a reference to work from anyone else. Yeager’s not afraid to recommend other reading, including some of my favorites: Stumbling on Happiness, The Not So Big House, and Your Money or Your Life. He draws on the ideas of Warren Buffet, Dave Ramsey, and Elizabeth Warren.

This is an excellent book for anyone just beginning to wrestle with personal finance. It’s especially good for those trying to escape the chains of consumerism. In a recent e-mail discussion Yeager told me, “I’m trying to reach a new audience, including folks who have never and probably will never pick up a typical PF book.” With its casual blend of humor and good advice, The Ultimate Cheapskate’s Road Map to True Riches has a solid chance to meet this goal.

Addendum: Trent at The Simple Dollar has posted his review of the book. He likes it, too!

Source: getrichslowly.org

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Courtney has over 18 years of experience in sales, customer service, and senior level management. He holds a Bachelor of Arts degree in English and History from Mount Allison University and a Master of Business Administration degree from the University of Saskatchewan where he studied Marketing and Finance. Courtney has made a career of exceeding the expectations of his stakeholders. He takes great pride in the number of referrals he receives and the degree to which his clients express their gratitude for his hard work. He is an outstanding mentor, coach, and leader, has a tremendous work ethic, a deep sense of fairness, and limitless commitment to doing what’s in the best interests of his clients.

Join us as Courtney shares his mindset and a glance at his journey to becoming a Real Estate Rockstar by consistently helping those around him accomplish their goals.

Quotes to Live By

  • “You gotta get up in the morning, do the work and celebrate those minor successes.” – Courtney Atkinson Click To Tweet

Courtney’s Book

Courtney’s Tools

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In this Episode, We Also Talk About

  • How to get business.
  • How to overcome struggles in the business.
  • What script to use on a listing appointment.
  • How to handle challenges with team building.
  • How to break through your goals.
  • Plus so much more!

Thank & Connect with Courtney

If you enjoyed this interview and would like to connect with Courtney and thank him for his rock solid advice, you can do so easily by following the link below.

Click here to connect and thank Courtney

Thanks for Rocking Out

Thank you for tuning in to Pat Hiban Interviews Real Estate Rockstars, we appreciate you! To get more Rockstar content sent directly to your device as it becomes available, subscribe on iTunes or Stitcher! Reviews on iTunes are extremely helpful and appreciated! We read each and every one of them, please feel free to leave your email so that we can personally reach out and say thanks! Have any questions? Tweet me, Facebook me and ask Pat anything. Don’t forget to head on over to Bare Naked Agent for Pat’s answers, and advice. Thank you Rockstar Nation, and keep rockin!

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These seven back-to-school savings tips will have your kids ready for another year without busting your budget.

July 28, 2023

New backpacks, calculators, shoes, musical instruments, and books—the shopping list for school supplies seems to get longer each year. It’s no wonder that families with children in elementary through high school planned to spend an average of $890.07—an all-time high—on back-to-school shopping, according to a 2023 National Retail Federation Report. 

Clearly, back-to-school season can put a major dent in your budget. So how can you save money on back-to-school shopping? 

Fear not. Tiffany Morrison, a personal finance writer, says there are ways to save money that can help ease the financial sting: “Back-to-school shopping can be done without breaking the bank.”

Here are seven tips for saving money this back-to-school season:

1. Plan ahead 

The last thing that most parents and caregivers may want to think about during summer break is the next school year. But Morrison says it pays to plan ahead to stay in front of your back-to-school finances. 

“Having a plan when it comes to school supplies and new shoes can help you not go over budget,” says Morrison, a mother of two high schoolers. 

After all, no one wants to start a new school year in debt. 

As soon as you can, Morrison says to make a list of the items your kids may need for the upcoming school year. Think about school supplies, backpacks, shoes, a first-day outfit, other clothes your kids may have outgrown—or anything they might need for extracurricular activities. Be as specific as you can, keeping in mind that your child’s school may not release its school supply list until just weeks before school starts—or sometimes even after it starts.

“Knowing exactly what you’re looking for ahead of time is a big help,” she says. “This way, you aren’t overbuying, which is easy to do when you aren’t prepared and don’t have a plan.”

After building a list, research prices. How much do those must-have shoes cost? How much extra is a backpack with wheels? Tallying up the numbers might reveal that back-to-school shopping will be more expensive than you anticipated. But don’t stress. There are a variety of back-to-school savings tips and clever ways to save money that can help you make it more affordable. 

For starters—and in the spirit of preparedness—Morrison recommends setting up a back-to-school savings challenge for yourself. 

“This involves setting aside a small amount of money, every paycheck, for a few months,” she says. “That way you’re prepared and not stressed about breaking the bank when that time comes.”

Where should you store those savings for back-to-school shopping? A high-yield online savings account allows your money to grow each month thanks to compound interest. It’s safe and easy to access, and you can even use multiple savings accounts to stay organized as you save toward different goals.

2. Look for midsummer deals

Once you have a list, Morrison recommends mapping out which stores have the items. Back-to-school shopping tips like this help you streamline and prioritize securing those midsummer deals so you don’t miss them. 

“A lot of stores start having sales on school uniform clothing and school supplies beginning around July,” Morrison says. She adds that you can also find deals in the end-of-season clearance sections of stores.

“I also check to see which stores have any coupons available,” Morrison says. “And don’t forget to check the mobile apps associated with each store. Sometimes they offer extra savings.”

3. Stock up on back-to-school staples throughout the year

Some school supplies are timeless, and they need to be regularly replaced. Things like notebooks, folders, glue, markers, crayons, pens, and pencils always need to be restocked before the next school year. 

For that reason, Morrison says that a great way to save money is to spread out your school-supply shopping throughout the year. By jumping on sales when you see them, you can check off a good chunk of your back-to-school shopping before the summer even begins—and at a fraction of the cost. 

Another back-to-school savings tip from Morrison? Sift through the supplies your kids bring home on the last day of school. You may find unused plastic folders or spiral notebooks that can be saved for the upcoming year. You can also stow away items with a longer shelf life, like scissors, rulers, calculators, and protractors, so they stay in good condition. 

4. Start meal planning

Morrison saves the most money of all on meals and snacks for her kids. That’s why, when it comes to tips on saving money this back-to-school season, meal planning is her biggest focus. 

That doesn’t mean planning every lunch down to the last grape. Instead, Morrison likes to plan her kids’ breakfast, lunch, and dinner around their school and activity schedules. 

For example, she says if there’s a busy week of school concerts and soccer games, you might be tempted to make an unplanned detour to the drive-thru on the way home. Instead, Morrison recommends always having an easy-to-prepare meal available for when things get hectic. “A simple sandwich with chips and veggies can go a long way,” she says.

To become a better meal planner, Morrison recommends practicing over the summer so you’ll be prepared when the school year is in full swing.

5. Take advantage of tax-free shopping days

Hitting the stores during tax-free shopping days is a lesser-known tip for saving money this back-to-school season. The downside? Only some states offer them, and they can include residency and product restrictions, so do your research before crossing any state lines for back-to-school shopping. 

Tax-free shopping days may be a great way to save money, Morrison says. But she also notes that shops and stores may be busier on those days. One tip: Arrive at stores early to beat the crowds and take advantage of those tax-free back-to-school savings without too much stress or having to deal with sparse inventory. 

Morrison notes that not all states offer sales tax holidays—and of those that do, some only reduce a portion of the tax. And be sure to check which items are eligible for the sales tax holiday before planning your back-to-school shopping. 

6. Involve your kids in scouting out back-to-school savings 

Implementing back-to-school savings tips doesn’t need to be the sole responsibility of parents. Teaching your kids about money and getting them involved in the family budget can help them understand the importance of saving money on back-to-school shopping. In the short term, they’ll feel like part of the team in making smart money decisions. And in the long term, they’ll file away life lessons for managing their own money. 

Morrison recommends getting younger kids involved in the savings challenge. Whether they have an allowance or not, you can give them a “bonus” and have them deposit it in a back-to-school savings jar. They’ll see their jar fill up over the summer and can enjoy buying a few back-to-school items with the money. 

Older kids can help save money as well. Morrison gives her kids a budget for their clothes and shoes. “If they want something more expensive, they have to help with the difference. They’ll usually stay within budget if they want to save their money.”

7. Make smart saving part of the family 

“The older they get, the more expensive they get,” Morrison says. When healthy financial habits are part of your family culture, you can help your kids grow up with the confidence and know-how to make smart money decisions. That will help you manage your back-to-school spending, but it will also set them up for financial success in the long run.  

Even during summer break, saving doesn’t need to stop. Finding inexpensive activities for kids can keep the momentum going from one school year to the next—and help you budget more for back-to-school essentials. 

Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.

Source: discover.com