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There’s a divide in the world of personal finance. On one side are the folks who offer advice for scrimping and saving your way to financial success. On the other are the experts who scoff at frugality and champion big wins. I think there’s a place for both.

From my perspective, it’s important to do the small stuff — clipping coupons, conserving electricity — because doing so builds good habits. And, of course, many small actions combine to yield big rewards in the long term. (Plus there’s the fact that a frugal lifestyle costs less to support, which means you can reach financial independence all the sooner!)

On the other hand, the “big wins” camp has a valid point. Too many people focus exclusively on the small stuff because it’s easy to do and doesn’t require any real sacrifice. Yet you improve your monthly cash flow by hundreds of dollars by achieving a single big win, which is likely to be more than you save on all of the thrifty things you do combined.

Big Wins vs. Pyrrhic Victories

The way I see it, there are four types of things you can do to reduce your expenses or boost your income.

  • Difficult (or time-consuming) things that provide small pay-offs. These pyrrhic victories include things like going door-to-door to collect old newspapers in order to earn money or making your own laundry detergent.
  • Easy (or quick) things that provide small pay-offs. Because there are so many of these opportunities, they’re the bread and butter of personal finance. They’re the daily victories with which we’re all familiar. On the income side, they include working overtime and participating in research studies. Small, quick ways to reduce spending include clipping coupons, buying clothes at thrift stores, and making use of the public library.
  • Difficult (or time-consuming) things that provide big pay-offs. Some tasks, such as moving to a cheaper home in a cheaper city, can provide huge rewards, but they take a lot of time and effort to accomplish. These are ongoing projects, and might include selling all of the stuff you’ve collected in your attic or garage. (An example of this is me selling my comic books last year.)
  • Easy (or quick) things that provide big pay-offs. Here’s where you should spend most of your time: Working toward big wins. These include negotiating your salary (which takes minutes, but pays off for decades to come) and reducing your transportation costs (which you can do in a matter of days).

Here’s a diagram to provide a visual representation of what I’m describing:

The reward quadrant
Some actions provide bigger payoffs than others. And some are easier than others.

Note: For convenience, I’m saying that the things we do fall into one of these four quadrants. In reality, all of this exists on a continuum. Some of the easy actions are easier than others. And each of us will obtain slightly different results.

As you can see, big wins are the best way to improve your financial situation. They’re easy (or quick) to achieve, but provide big rewards. If you want to improve your financial situation, start with these.

How to Achieve Big Wins

Here are some examples of common ways to achieve big wins that will dramatically improve your cash flow:

Housing

Housing is the biggest expense for most Americans — and by a wide margin. According to the U.S. Bureau of Labor Statistics’ 2012 Consumer Expenditure Survey (CES), the typical American household spends 32.8 percent of its income on housing, which includes mortgage (or rent), maintenance, insurance, interest, and utilities.

In an ideal world, you’d slash your housing expense by buying an affordable home in a city with a low cost of living. But while that would provide a huge financial reward, it’s not exactly easy, which means it doesn’t qualify as a “big win” in my world. But there are easier ways to reduce your living expenses.

The biggest (and, admittedly, most difficult) is to move within your current city. Sell your home (or move out of your rental) and choose something more affordable. Think about it: If you’re an average American who spends slightly more than $50,000 per year, $1,408 is going to housing every month. Drop that by 10 percent, and you’ll save almost $150 per month. Drop it by 30 percent, and you’ll save more than $5,000 per year!

Transportation

Transportation is our second-largest expense. We spend an average of $750 per month (17.5 percent of the typical budget) to get around, including vehicle payments, gasoline, insurance, and repairs. I know Americans love their automobiles. They’re loath to let go of them, even in the face of logic. But imagine how much you could save if you could cut your car costs in half! How do you do that?

  • Sell your current car. Replace it with a used vehicle, one that’s fuel efficient. (Side benefit: An older, used vehicle will cost less to insure!)
  • Drive your car only when necessary. When possible, bike or walk to reach your destination. (Side benefit: Increased fitness, which also saves you money!)
  • Make use of public transportation. (Side benefit: Time to read!)

Usually when I recommend people make changes to the way they get around, I’m met with a wall of objections. No worries. I’m used to it. But let me suggest that instead of looking for reasons you can’t do this that you instead look for ways you can. You’ll save yourself buckets of money.

Other expenses

Together, housing and transportation consume half of the average American’s budget. There are enormous opportunities to save if you choose to economize on these two categories. But there are dozens of ways to achieve big wins in other areas too.

The CES reveals that the typical household spent $1,736 on clothing in 2012, $3,556 on health care, $2,605 on entertainment, and $6,599 on food (which doesn’t include the $783 that went toward alcohol and tobacco).

Because each of us is different and we spend in different ways, opportunities for big wins vary from person to person. For example, after tracking my spending for the last half of 2013, I realized that I was spending way too much on travel. This year, I hope to cut my travel costs in half. Doing so would allow me to save money toward other goals, such as, guitar lessons.

Examine your own spending. Where do you have the most room to cut back? How can you do it? Look for big wins — and make them happen.

Income

I’ve written before about the importance of increasing your income. While it’s great to cut your spending, you can only trim your budget so far. Your earning potential, on the other hand, is theoretically unlimited. If you really want to get rich — slowly or otherwise — you’re going to have to make more money.

But as with spending, some methods of boosting your income provide big wins while others don’t. Here are two easy (or quick) ways to make a big difference to the amount of money you make:

  • Take a second job. Earning more in your spare time is a quick way to boost your cash flow, and it’s something that almost anyone can do. Some people don’t like the idea of taking a second job (they feel like it’s beneath them) and others are full of reasons that doing so is impossible (they don’t have time, the job market is tough). But for those who choose this path, a second job involves less risk and planning than most other income-boosting strategies, and it’s likely to cause far less stress than your primary job.
  • Negotiate your salary. One of the best ways to increase your income is at the source: during salary negotiations when you land a job or during a performance review. For many folks, salary negotiations can be awkward or scary. But in his book Negotiating Your Salary, career coach Jack Chapman argues that those few minutes during which you ask for more money in an interview can make a difference of tens of thousands of dollars over your career. Maybe hundreds of thousands. That’s a big win.

There are other ways to supercharge your income — become better educated, start a side business, become a landlord — but they take more time and effort. You can find a second job this week and be earning more toward your financial goals. And you can negotiate a salary increase the next time you sit down for a performance review. Both provide big boosts to your earnings for a minimum of effort.

The Bottom Line

I’m not saying you shouldn’t make your own laundry detergent or collect newspapers to earn money. But I think it’s important to put these activities in their proper place and to realize that you will never get rich doing them. (In fact, they’re a poor way to get out of debt.) It’s better to focus on actions that are easier to complete and/or yield greater rewards.

The biggest barrier between the average person and big wins isn’t ability. It’s psychology. Big wins generally require effort and sacrifice, which can be tough to stomach, especially if you’re just getting started with smart personal finance. But the sooner you understand that these aren’t fringe ideas, the quicker you’ll get out of debt or reach financial independence. The small stuff forms a great basis for behavioral change, but it’s doing the big things that will make you rich.

Source: getrichslowly.org

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Appraiser, ECOA, Video Marketing Products; Conventional Conforming News; What Has Driven Rates Higher?

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Appraiser, ECOA, Video Marketing Products; Conventional Conforming News; What Has Driven Rates Higher?

By:
Rob Chrisman

Fri, May 26 2023, 11:12 AM

Did you know that wheat futures prices are at a 2-year low? And lumber prices continue to drop? Those numbers should help reduce inflation. During the conference in NY there was plenty of talk about external influences such as price increases on residential lending. But there are also plenty of issues within our biz that face lenders daily. For example, signing bonuses continue, albeit at a slower rate. Perhaps some of the economic bloom is off the bonus rose? Big signing bonuses come with big handcuffs. It stinks when a competitor takes your production but not your overhead, right? With the help of technology and tracking, a lender’s management can, more than ever, determine whether a given branch or LO is making money for the company, or is merely a source of concessions and extensions. Recruiters sometimes talk of the “greater fool” theory when bad LOs or branches move on to another lender. (Today’s podcast can be found here and this week’s is sponsored by Black Knight. From point-of-sale through post-closing, the company’s trusted loan origination system, Empower, as well as its integrated, end-to-end origination solutions deliver unmatched capabilities, functionality, and support to increase processing efficiencies and lower operational costs for lenders. Hear an interview with Polunsky Beitel Green’s Stacey Maisano on women in the mortgage industry and getting the younger generation involved.)

Lender and Broker Products, Software, and Services

Loan officers, if there was an easy button for creating incredible video marketing content on social media, would you press it? Now you can thanks to Video Catalyst by SocialCoach. Say goodbye to the days of wondering what to say, what equipment you’ll need, and how you’ll edit. With Video Catalyst, we’ve made it easy to create compliant, scroll-stopping, professional-grade videos in record time. Here’s how: We write four fresh, relevant (and compliant) scripts for you every month. You simply read the scripts while recording the video from your smartphone and then send it back to us for professional editing, which includes the addition of music, dynamic captions, gifs, and emojis. We then post it to your account for seamless sharing. That’s it. You press record, we do the rest. Want to see how Video Catalyst can unlock the power of video marketing for your business? Check it out here.

Calling all compliance managers! Imagine if you could complete your ECOA/Reg-B Process in the time it takes you to read this blurb. Imagine saving thousands of dollars and hundreds of hours by not working on your ECOA process. Sounds like a dream, right? Well imagine no more! Velma Connector is here to make your compliance dreams come true. Connector automates the whole ECOA process and can do the work of multiple team members, making sure you never miss another NOIA notice, which means never having to worry about a costly fine ever again! If you’re ready to start saving all that time and money, contact Velma today and ask us how we can get you a 300 percent ROI in just the first year!

Is your appraisal vendor performance below average? Book a complimentary appraisal vendor performance consultation with Reggora’s Chief Operations Officer, Alek Roberts, to see how your vendors stack up. You’ll see how your vendors perform relative to industry average turn times, revision rates and fee escalation rates. You’ll also see data on how that impacts your overall origination process, including if and how your operating costs are higher than they need to be. Book now

Investors and Lenders Adjust Their Conforming Conventional Offerings

United Wholesale Mortgage announced enhancements to its Conventional 1 percent Down product, allowing borrowers with less than 80 percent of the area median income (AMI) to qualify. Those who qualify will put down 1 percent of the loan towards their down payment and UWM will then pay a 2 percent grant up to $4,000, for a total down payment of 3 percent.

Rocket Mortgage and Rocket Pro TPO have introduced ONE+ by Rocket Mortgage, a 1 percent down home loan program that is available for qualifying homebuyers whose income is equal to or less than 80 percent of their area median income (AMI) for single-family homes, including manufactured homes. Rocket Mortgage provides a 2 percent grant towards the down payment. ONE+ completely covers the monthly mortgage insurance fee for the client. Partner with Rocket Pro TPO to take advantage of ONE+ today!

Pennymac updated Conventional LLPAs effective for all Best-Efforts Commitments taken on or after Monday, May 15. Details are available in Announcement 23-34.

The Federal Housing Finance Agency (FHFA) announced the rescission of the DTI ratio-based fee. As a result, Pennymac updated the Best Effort rate sheet effective for all Best Effort Commitments taken on or after Thursday, May 11th. Details were posted in Announcement 23-23: Updates to Conventional LLPAs.

Pennymac is aligning with Freddie Mac’s credit underwriting update, announced in Bulletin 2023-6, adding a requirement that a non-occupant borrower may not be an interested party to the transaction (i.e., the builder, property seller, real estate agent or broker, etc.) This new requirement is effective with loan deliveries on or after 7/3/23. View the Penny Mac Announcement 23-32 for additional information.

Citi Correspondent Lending Bulletin 2023-04 includes credit policy updates on Agency loans appraisal waivers, life insurance net cash value on Non-Agency Jumbo loans and clarifies subordinate financing applicable to Non-Agency Jumbo.

PRMG Product Update 23-26 includes clarification on multiple products. Conventional Products requirements regarding use of business funds in the transaction a cash flow analysis, underwriting review requirements when obtaining prior approval from VA, Alternative AUS Jumbo clarification for properties in a declining market, program fee requirements on CA CalHFA Products, and mortgage insurance coverage requirements on CO CHFA Preferred Plus Conventional.

Many banks are stressed and are not lending. Flagstar Bank has money, is lending and actively looking for SBA 504 loans now. This includes General Purpose Properties, Conventional portion minimum $750,000, 2 years tax return debt service. CA, NV, NY with more states to come, Small Construction work is acceptable with no more than 20 percent of the project including the interim loan and permanent loan, 51 percent or more owner-user commercial. With Prime now at 8.25 percent, it is time to look at a long-term fixed 504 purchase or refinance. You can now refinance a 7(a) loan (or conventional) with an SBA 504 and maybe even get some additional cash out for business purposes.

Citizens Correspondent National Bulletin 2023-12 includes information on Condo Project Manager Update – DU.

Freddie Mac Bulletin 2023-9 announced multiple Selling Guide changes, including updated requirements related to property appraisals and condominium projects. For impacts on AmeriHome guidelines, see Product Announcement 20230504-CL for details.

With Guide Bulletin 2023-11, Freddie Mac announced multiple Selling Guide changes, including updated requirements related to IRS installment agreements and real estate tax abatements and exemptions. For impacts on guidelines, see AmeriHome Product Announcement 20230508-CL for details

Capital Markets

Keep two things in mind. The markets, and individuals, don’t like uncertainty. But the future is always uncertain. Second, economic doldrums lead to lower rates. But rates rose again yesterday as the clock wound down on the window for debt ceiling negotiations, with a potential U.S. default looming on the horizon. If the U.S. defaults on its debt, higher mortgage rates are a potential risk facing the economy.

How quickly we’ve moved on from the banking crisis, though loan officers should keep credit tightening in mind. Most banks, including those that failed, own 30-year fixed rate mortgage-backed securities. Those MBS prices have fallen the most with the Fed’s sharp run-up in rates, making it likely that banks will buy far fewer MBS (and jumbos) going forward, decreasing demand, widening spreads further, and generally causing mortgage rates to go higher. Rates have been on the rise as of late, and while some of the movement can be attributed to “hawkish” comments from the Fed, the shift higher appears to be global: The German Bund, Japanese Government Bond, and UK Gilt have all moved higher in lockstep.

Investors see the Fed cutting rates this year, even with Chair Powell and his fellow FOMC members doing their best to convince Wall Street that they’re serious about inflation and that no such thing will happen. In fact, recent Fed messaging has been that we may not be done with rate hikes just yet. After 500 basis points of interest rate hikes over the past year, it’s true that the Fed is close to the end of this hiking cycle, at least for the short-term. However, we could see a major sell-off in stocks and bonds if investors succumb to the Fed in this “tug of war” over the central bank’s monetary policy moves in the second half of this year and admit that multiple rate cuts in 2023 aren’t in the cards.

Chatter out of the MBA’s conference in Manhattan (in addition to more companies shuttering and frustration over repurchases) included delinquencies picking up for various credit types, volatility driving spreads wider, MSR valuations pricing the impact of buyer burnout, and mortgage credit availability continuing to decline. The collapse of three mid-size US banks and the forced marriage of Credit Suisse to UBS pushed lending standards to tighten across the board, especially for commercial real estate and residential lending.

For residential, the tightening was more pronounced in jumbo and non-QM as opposed to GSE and government loans. Banks becoming more cautious on risk has also led to standards tightening on multi-family, by increasing spreads, raising covenants, and lowering LTVs. Loan demand is also falling (including for HELOCs and other residential real estate loans), while the lending standards are getting tighter, typical for an economy that is poised to enter a recession.

These tighter lending standards exist at a time when there are few homes for sale. The reasons for the scarcity of existing home sales are well known at this point: Lack of inventory, elevated home prices, and half of all mortgaged homes having first-lien interest rates at or below 3.5 percent while rates continue to rise. Those elements are unlikely to change anytime soon. Supply constraints are a familiar topic of discussion with millions of Americans content to keep their rate and not sell anytime soon, and, coupled with today’s homebuyers being exceptionally interest rate sensitive, as most won’t accept a rate higher than 5.5 percent, and it’s not a good recipe for lenders.

If mortgage rates fall somewhat, we still have an affordability problem, even with rising wages. Homebuilding will eventually rebound and help this issue, but the rate of decreases in the backlog reported by the builders and elevated cancellation rates don’t bode well for an imminent change.

Shifting to the intra-day price moves, despite today’s early close ahead of the long Memorial Day weekend, several key economic releases will be out and could sway the Fed’s thinking regarding further rate increases. We’ve already received personal income and spending for April (+.4 and +.8 percent, respectively, core PCE +4.7 percent year over year), and durable goods orders (+1.1 percent, ex-transportation -.2 percent). Expectations were for income and spending increasing 0.5 percent and 0.4 percent month-over-month, respectively, with the Core PCE Price Index increasing 0.3 percent month-over-month and 4.6 percent year-over-year. Later today brings Michigan sentiment before fixed income futures settle at 1pm ET and cash markets close at 2pm per SIFMA’s recommendation. We begin the day with Agency MBS prices worse by a few ticks (32nds), the 10-year yielding 3.82 after closing yesterday at 3.81 percent, and the 2-year is at 4.56 after the strong, anti-recessionary, data this morning.

Employment

A Louisiana based full-service, independent mortgage banker averaging $1 billion in production annually is searching for a proven retail sales leader to run all business development initiatives. The Sales, Recruiting, and Marketing departments will report directly to this head of business development role, and the role will report directly to the CEO. The ideal candidate will have a demonstrated track record of hiring and managing multiple production offices across several states. The IMB is well capitalized, has agency direct approvals, offers niche products, significant technology advancements and a world-class operations team with experienced, tenured sales and fulfillment employees. For confidential consideration, please email resume to Chrisman LLC’s Anjelica Nixt.

“Logan Finance is blessed to see such incredible growth recently. As we keep count of all the units that drive our business, it’s easy to lose sight of all the military units and those individuals who served throughout history to help afford us all the possibilities we have today. As we think of Memorial Day, we should celebrate it as a day that honors all these great opportunities and focus on those who have made the ultimate sacrifice to protect the freedoms we should never lose count of. From the Logan family to yours, ‘Happy Memorial Day.’”

As a mortgage sales professional have you ever thought, “What if I could focus on only the things that actually grow my business, flipping the hourglass and spending 80 percent of my time on what I do best: building relationships?” Or “What if I could surround myself with sales support that is truly team inspired, results driven marketing and customer obsessed headache-free process?” Welcome to radius financial group! They started radius with one main focus: to offer a better value proposition than any other bank or mortgage company in the country for you, your borrowers and your referral partners. radius can help you grow your business, have a better quality of life, and make more money. For confidential inquires please contact Carla Herrera.

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Source: mortgagenewsdaily.com