What’s more important to you – knowing how to solve a trigonometry problem, or knowing how to create a budget that will allow you to save money, get out of debt and become wealthy?

Well, believe it or not, I actually asked my trigonometry teacher that question 21 years ago. I was a junior in high school and knew, sitting in my hard, cold, chair, that I was NEVER, and I mean NEVER going to teach trig, have a job that needed trig solving skills, have in-depth social conversations regarding the subject – must I go on? I happen to know there are people whose trigonometry skills actually pay their bills. My brother is one of them. He’s an engineer, has his own business, and I marvel at his big brain every chance I get. Does it mean that someone with this knowledge knows how to run an effective and efficient business, pick an insurance plan, how to understand just what in the heck APR (Annual Percentage Rate) is? I believe strongly that the answers to these questions should be a requirement in our public education system. I call them “Life Skills”.

Back to me sitting in my Trig class: I felt like a total moron because I really just didn’t “get it”, yet somewhere in the depths of my being, I knew there had to be something I could be learning that would relate to me, my dreams, my aspirations! So, in the sweetest way possible, I raised my hand and actually asked the question, “How is Trigonometry going to help me in the real world?” Well, looking back on that, I’m sure my teacher was none too pleased, but I was a lot smarter than I thought I was – there just wasn’t a forum to teach life skills when people need them the most.

So, as a testament to my passion about this, I have assembled a team of experts that will do just that on January 28th at Highlands Ranch Eastridge Recreation Center from 7-9 p.m. And yes, it’s FREE. No catch.

In some cases, Trig does relate to wealth – if you’re using those skills to make money, then perhaps it’s enough to invest in real estate and become wealthy. Whether you’re good at math or not, everyone in this country needs to understand how important their credit score is and how to increase it. Would it also be great to know how to get rid of your unwanted items without filling our earth with trash, and how your home insurance works, and what kinds of accounting practices you should keep to save you money, or even how to have an incredibly efficient and time-saving workout that won’t injure you? The list goes on. I hope to answer questions people need to know so they can manage their lives better, make better decisions, and live a happier life.

Please join me and my team of experts next Wednesday, January 28th, for a FREE, life skills workshop. It’s from 7-9 pm and we will be giving away $50.00 in gift cards. I look forward to hearing what your definition of wealth is – and how to help you achieve it!

Megan McDonald, Licensed Mortgage Planner
Excel Home Lending
383 Inverness Parkway, Suite 140
Englewood, CO 80112
Cell: 303-717-9995
Fax: 303-468-6133
http://www.excelhomelending.com
http://www.mcdonaldlendingservices.com

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Credit Crunch Re-cap

 

2002 -2007: Extremely strong housing market due to loose credit

2007-2008: Tightening credit standards, less home buying, less lending, pattern of falling home prices.

 

2008 Year in Review

 

Falling home prices caused stricter loan standards. Therefore, there were fewer home sales. The federal government effectively seized control over Fannie Mae and Freddie Mac.

 

  • January – 30-year rate stayed below 6%
  • June-August – 30-year rate averaged 6.5%
  • November – 30-year averaged above 6%.
  • November 25, 2008: Fed announced purchase of $500 billion of mortgage-backed securities and $100 billion in Fannie Mae/Freddie Mac debt.
  • December – 30-year rates plummeted to 5.72%

According to bankrate.com, in 2008, we experienced a swing from 5.7% to 6.5%. Isn’t it amazing how much media frenzy and impassioned discussion ignited over inflation, deflation, and recession numbers that were LESS THAN 1 PERCENT?!!! Americans habitually pay on average over 12% on their credit cards. So what do you have to gain by getting panicky over a 1% swing?

 

Let’s BIG PICTURE THIS. Haven’t you heard your financial advisor, as well as economy and market experts, suggesting that you ride out the stock market crashes? The sound advice is, don’t divest, keep your investments, and over time you will recuperate your losses. On average, Americans will do something with their mortgage within 5 to 8 years – sell, refinance for a different rate or program, or refinance for cash out. In both cases, investing in the stock market or in real estate is a risk. It becomes less risky over time. In other words, you have more time to make up losses. If you’re in retirement, it’s definitely time to pay attention. If you’re in the work force, it’s always good to pay attention and utilize an arsenal of financial experts – a CPA or Tax Planner, a Financial Advisor etc. If you can’t qualify now, don’t worry, you will in the future and will be able to take advantage of a great cycle we are now experiencing.

 

I’m not suggesting that a drop in rates isn’t significant. I’m also not suggesting that rates won’t go lower. As of last week, rates are hovering between 5-5.25%. Of course, if you can qualify for a purchase loan in this market, I’d much rather have the 5.7% or lower in the last few weeks than the 6.5%from earlier in the year. Certainly, if you can experience a 1% percentage point from current to a refinanced rate, I’d recommend that, too. If you stay in your home long enough to recuperate closing costs, then a reduction in rate and paying less interest over time makes sense.

 

2009 – What will we see?

 

Mortgage insurance companies have just come out with a significant announcement: As of February 1st, all MI companies will NOT insure a cashout refinance. What this means is that if you have less than 20% equity and want to pull some of it out in cash, you better do it NOW. Due to interest rates, it’s worth your time to explore! Keep in mind you can use some cash to invest in the market. (This is only a suggestion. Please utilize a Financial Planner). Note that FHA cashout refinances are possible to 95%, but now will require two appraisals.

 

The Federal Reserve says it plans to buy up to $500 billion worth of mortgage-backed securities from Fannie, Freddie, and their cousin, Ginnie Mae in the first half of 2009.  This will hopefully keep rates low for the time being.  Stay tuned for a more detailed 2009 Forecast in my next blog entry.

 

Megan McDonald, Licensed Mortgage Planner
Excel Home Lending
383 Inverness Parkway, Suite 140
Englewood, CO  80112
Cell: 303-717-9995
Fax: 303-468-6133
www.excelhomelending.com
www.mcdonaldlendingservices.com