Boy, have I been busy these past two months. The activity has kept me from posting as much as I would like, but it is more important that I get some of these things done. I don’t have time to go into all the detail, but will share just a little bit. The good news is that I will have additional material for posts in the future.
These are the items that have consumed the majority of my time away from work:
1. Canceling a Timeshare Contract
There is a lot to this story and I will share every detail later on when I have more time. Actually, I might just end up copying and pasting some of the letters that I have sent. The short version is that my wife and I got sucked into a presentation while trying to get discount show tickets in Vegas. We left unsure about the purchase after signing paperwork. We tried to cancel and they tried to run the transaction anyway. We finally got it cancelled. No money has yet changed hands, but I do have a few loose ends.
2. Refinancing Rental House Mortgages
I have been working to refinance 5 rental houses. Of course, this involves a ton of paperwork, signing a bunch of stuff, arranging appraisals with the tenants and contacting everyone so we are all on the same page. The plan is to decrease the interest rate, decrease the term and decrease the monthly payment. So far, all is going according to plan but one of the appraisals came in lower than I would agree with. It means more money at closing, but the savings will be big.
3. Negotiating Purchase of a Business
I have also been working to negotiate the purchase of a local business. This occupies some time as I have reviewed the books, met with the owner and spent a weekend back and forth negotiating points and creating a framework for our agreement. The next step is to meet with the banker on the Monday after I get back from a South Carolina golf trip. I am really looking forward to the trip as the time away will be very relaxing.
Going forward, two of these items will no longer occupy a bunch of my time. Now if we purchase this business, I will have to spend some time each week looking over and reviewing numbers and signing checks. But even if it is five hours per week, it should still be worth it. I can share more details later as well.
Here are the most recent carnivals in which my blogs have participated.
CFM is Cash Flow Mantra (which is this blog)
GPM is Grand Per Month
PT is Penny Thots
A little while ago I mentioned that I was looking into refinancing some of my rental property. I figured that interest rates had gotten so low it was worth looking into and seeing what might happen. I think there is only one way for rates to go and that is up. Well, life got in the way and I had to get some other things done first as I am sure that most of you know. But now, I have been able to begin looking into the refi again.
It turns out that the mortgage guy at the bank left so I am with a new guy. I have only spoken with him on the phone, but I think I like him better. He is fairly responsive, and I think we can get this done.
I made myself a spreadsheet at the end of October with the data from all 6 of my rental houses. One is the place we used to live in before moving 12 years ago. We have a second mortgage on it so there is not a lot of equity. But the other 5 are the ones that I will be able to refinance. I figured that while I was decreasing the interest rate, I would also look into decreasing the term.
Currently, my rates run from 6.38% to 7% with remaining terms of 21 to 23 years. I had him look at 20 year and 15 year numbers, and I am liking what I see.
For the 20 year term, the interest rate would be 4.25% and I would have to bring just over $13,000 to closing. The payments would decline by about $948 per month. It would take about 14 months to break even and get my cash back.
For the 15 year term, the interest rate would be 3.125% and I would have to bring $10,500 to closing with payments being reduced by $659 per month. It would take me 16 months to get the cash expense back. But I would save 5 full years of payments at the back end compared to the 20 year mortgage. And I will definitely save a bundle compared to my current situation.
The savings could be used to pay some of my other debts which I am working aggressively to get under control. Right now, that seems like the best use of cash right now. I would prefer not to bring that much cash to closing, but consider the return on investment, and it is a great deal. If over the first year, I save $7908 in cash on my $10,500 investment now, my cash on cash return is just over 75%. Who wouldn’t take that kind of return on investment? So it makes abundant sense to get this thing done.
Which is why I hoping the refinancing on the rental houses all works out.
The following is a guest post:
When there are dreams budding inside your mind about having your own nest but you have only recently started saving, the time is ripe to consider a home loan. Home loans allow you to live your dream before you own it and give you the opportunity to live with ease and comfort in the home of your choice. If you take home loans you will have to carefully consider your economic position and if you earn enough to pay those easy monthly installments with ease you can forget the woes and chill, for home loans usually allow you to pay the price of your house through a long period of about 15 to 20 years.
Who Can Get It?
There are several things that you have to take care of after the idea of taking home loans hits you. Compiling all the necessary documents is the first point to keep in mind and as the USA is a security conscious state your nationality matters. If the home loans borrower is a green card holder W-2 and pay stubs are needed. If he is self-employed, tax returns, checking/savings bank statements, copies of any stock brokerage or IRA/401K accounts are necessary. Though FICO or credit score as they are referred to in the American market matters and can pose as a stumbling block for non-residents; for Britons there is a ray of hope as UK credit ratings are accepted by certain lenders. For a visa holder, along with W2 and pay stub, copies of visa and passport are necessary. For foreign nationals taking home loans to buy homes in the USA provisions exist which need to be complied with. The next important thing that needs to be taken care of is the deposit. The higher the deposit, the lower the interest. Therefore saving to be able to put aside a handsome sum as deposit is absolutely necessary. The thing that matters next is choosing the best possible home loans option considering one’s goals. The types of home loans and rates offered by different institutions vary and one must also be careful about the closing cost ones financier may impose on him/her.
The Process and the Processing
Getting pre-qualified for the home loan is the next step. This means that your assets and liabilities are assessed properly by the broker who gives you a clear picture about how much you can qualify for. Once the details of documentation is complete and the deal sealed, the time has come for you to get a GFE and TIL. A GFE is a good faith estimate and a TIL is a truth in lending statement and these are provided to the home loan borrower according to the Federal Real Estate Procedures Act. These itemize the costs incurred in the home loans process. A title search is another important item. It is conducted to ascertain that there are no encumbrances to the ownership of the property. Putting aside a sum into escrow accounts ensures the payment of insurance and tax amounts for the first few months. After this the loan approval process is completed and funds are ultimately disbursed. By 25 to 45 days of the process the loan is ready to be closed and the lender pays througha cashier’s check or wire transfer. After signing the documents before the notary and paying closing charges, the house finally belongs to the borrower.
Word of Caution
This is the general outline of the home loan process in the US. However this is not the entire story. This is also the same process which precipitated the world economic crisis. Lots of home loan borrowers in the USA are still underwater which mean that their house is worth less than the amount they owe to banks or financial institutions. When real estate prices went down and interest rates went up this situation was born. However really responsible lending or borrowing do not make room for such crisis as in that case a careful restructuring of the home loans accounts by an adjustment of the principal would make the matter more bearable. After all home loans are a great option for the middle class for acquiring their home sweet home and always shall be.
Author bio: Jonny Pean is a financial consultant and writer for EasyFinance.com. He helps people to tackle their financial problems related to loans, personal finance management and home equity issues.