Where are mortgage rates headed?

I get asked questions all the time about mortgage rates. First, what are rates today? When that is answered, the next question is invariably, "where do you think interest rates are headed?" So, here's my answer for today, 25 January 2012. Rates are going to be posted every day on this blog just below the big logo. As for mortgage rates, I believe they've found a floor at 3.75% for a 30 year fixed and 3.25% for a 15 year fixed. You might see them pop below those rates for a day at a time but this seems to be a floor for now. The Federal Reserve has stated that they will maintain their 0% interest rate through 2013, so given the fact that there needs to be a yield on interest rates (profit) the mortgage rates need to stay where they are without dropping in order for investors to stay in the market and provide funds for mortgage lending. So, rates are perfect for locking in now at historically low rates. Don't get too greedy, get an awesome rate and get it done.

Given these facts, a drastic thing could happen and rates could go lower, but I don't see it. If you can lock in now at 3.75% on a 30 year fixed or a 3.25% on a 15 year fixed, do it! ONE NOTE ON APR. A lot of borrowers do not understand APR and overlook it. Here is the key: the closer your APR is to your actual interest rate the LESS FEES YOU ARE PAYING! Don't get fooled by local credit unions or banks by saying 15 year rates are at 3% when their APR is 3.257%. If your APR is more than .15% higher than the actual rate, you are paying for it in closing costs and probably not saving much per month. A recent borrower of mine with a $225,000 loan amount asked about this exact scenario. I locked him at 3.25% with an APR of 3.34% and the local credit union was advertising a 3% rate with an APR of 3.257%. So, in order to get the rate of 3% with them it would have cost him $3700 in EXTRA closing costs, and the .25% would have saved him $29 a month. Not worth it!

Call me with questions about rates if you are interested and need help.

Contest winners!!!

Congratulations to Ashley Love and Megan Thomas for winning the contest we started in August! We asked for financial questions that you wanted answers and asked you to submit 5 questions so that you are entered in a drawing, and the winners now won $40 gift certificates to the store of their choice!

Thanks for the many of you who participated and we'll be covering these topics in blog posts and video tutorials over the next little while. If you have any more questions please feel free to submit them and we'll try and address them as soon as possible.

Announcements

August has begun, so we want to announce 2 contests, one that is already started and one that we're starting now. They are:

1. Financial questions contest - in order to tailor our blog to answer the questions you, our readers, have, we are asking that you send 5 financial questions to us via email, Twitter or Facebook. If you do so your name will be entered into a drawing where 2 people will win a $40 gift certificate to a store/restaurant of your choice. Email is johnny@totalfinancialhealth.biz; Twitter is @johnnytfh; on Facebook search for John Thomas and get your questions to us. So far you have an excellent chance of winning! The contest ends 15 August 2011 so hurry!
2. The Dirty Dash - our mantra at Total Financial Health, LLC is to be fit in your finances as well as your health, so we are offering to pay $10 toward anyone who will sign up and run the Dirty Dash in Midway with us. You can find information here: http://www.thedirtydash.com/. You will also win a free life insurance/retirement/debt analysis and get a roadmap to financial health and finding your financial fitness number for this! Take advantage of this contest!

As part of our services as a company we provide analyses for our clients to help them understand and get the right amount of life insurance, get a solid plan in place to be out of debt early and to know the exact debt freedom day and to find your financial fitness number so that you are ready for retirement. If you are interested in any of this, please contact us any way you can and we'll get you headed down the path to financial fitness!

Do I have the right amount of life insurance?

How much life insurance do you need? Are you over-insured or under-insured, or do you have just the right amount of insurance? It's a question that we get a lot so we'll try and answer it as easily as we can.

There are a few things to consider that could change your life insurance coverage, like your age, number of kids, your health history, etc. However, there are a few quick rules that will help you. Life insurance for a person should be treated as income replacement. If you were to take a lump sum of money like that to replace your income you would have to follow the history of the stock market, which over the last 75-80 years averages somewhere around 10% per year. So, if you're going to get around 10% a year on your money, you roughly need 10 times your income in death benefit to make that happen, plus the amount of your debts.

Here is an example: Bob makes $60,000 a year. He currently has a mortgage of $200,000, a car loan of $11,000 and two credit cards that total $8,000, totaling $219,000 in debt. So, 10 times his income plus the debts totals $819,000, so that is how much he needs in life insurance death benefit coverage. This is the safe way to secure your family if you were to pass on. For income replacement life insurance like this we always suggest level term life insurance.

Again, your situation in life might be different, so this can be slightly different for you. If your current income is not sufficient to cover your debt, or if you have kids, or if you are older, etc., you will have different plans. If you'd like a customized plan to evaluate your life insurance situation for free, you can send us some information. To get a hold of us, you can follow this blog, follow us on Facebook (search for John Thomas or Total Financial Health), follow us on Twitter @johnnytfh, follow us on Google+ (search for John Thomas) or email us at johnny@johnalanthomas.net.

Financial questions

So due to my life insurance license not being with a captive company anymore, I am now an independent agent and can write life policies with many different and diverse companies. It also allows me to bring my blog back up and answer questions and post financial articles. So, here is an assignment for my blog followers and readers. I need you to post your financial questions to me so we can get the answered. You can email them to me at johnny@johnalanthomas.net, post them to our company Twitter account @johnnytfh, post them on our Facebook site at www.facebook.com/johnnytfh or call me to ask them. We're going to be answering them directly as well as posting articles that will help you and have some guest writers in the financial world contribute their ideas to help you out. So, get the questions coming!

Johnny

Back up!

So for about a year now my mortgage license and life license has been a bit tied up into companies that only offered one product. No more! I've moved it over and freed myself to get back down to much better interest rates and a hugely diverse array of life insurance products.

So, stay tuned, I'll be updating this blog with financial questions that many people ask. If you have a specific question, email me at johnny@johnalanthomas.net and I'll try and address the question. Look for some answers soon!