Monthly Archives: March 2014
The question of when to refinance your mortgage is not a simple one. Many things must first be considered before the decision is made. If you are not careful, refinancing can actually hurt your bottom line rather than help it. With this in mind, let us take a look at some of the issues you may encounter when trying to decide to refinance and some reasons why you may or may not choose to do so.
The most common reason why a person will think it is time to refinance a mortgage is when they believe that they can reduce their monthly payment or interest rate. This may or may not be the right time to take such an action.
If a person has an adjustable rate mortgage (ARM), they may want to switch to a fixed rate mortgage. Many times, it is the case that the ARM rate has risen from its initial low point and now a fixed rate mortgage actually carries a lower rate. Other times a person may have a fixed rate mortgage that they obtained many years back. Over time, they have improved their credit score and they now have the ability to obtain a lower interest rate. Still other times the state of the economy is such that lower rates are generally available.
In any case, one should not judge the book by its cover. Most importantly, you have to realize that refinancing is not free. First, you will have to pay a fee for applying for a refinance. This pays the cost to run a credit check on you. Then there is the cost for the lender to check your title and get title insurance. Next, you will need to pay for the borrower’s lawyer. You will likely want a lawyer for yourself. There will also be other legal fees. Finally, you will need to pay points, taxes and an origination fee. Points can be especially confusing and you can learn more about them here. There may even be other costs not mentioned above.
Cost of Refinancing
In the end, the decision of whether or not to refinance in order to reduce payments comes down to math. You need to calculate all of the closing costs regarding the refinancing. Then you need to look at how much money you save each month after you refinance. Next, you consider how many months it will take for the money you saved to pay for the costs you incurred. If it turns out that you will be remaining in your home long enough to cover the costs of refinancing, then you should refinance. You can use the free mortgage calculator at Credit Sesame to help you figure out if you should refinance.
Example: You incur $10,000 in closing fees while refinancing and in the end, you save $500 a month. It would take you 10 months to recoup the costs of refinancing. If you will be remaining in the house for more than 10 months, you should refinance.
Another consideration you must be wary of is a clause in your original loan that penalizes you for paying it off early. When you refinance a mortgage, you are actually paying off the original loan and taking out a new one. Therefore, if there is a penalty for paying off the original loan early you will incur that penalty by refinancing.
Finally, you must realize that if you decide to refinance a 30-year mortgage to another 30-year mortgage you may be paying less monthly but besides paying for a longer period of time, you are also paying more in interest. In this case, whereas the cost is less monthly, the overall cost is greater.
The way a mortgage works is that you pay more of the interest at the beginning of the mortgage. So if, for example, you have a 30 year fixed rate mortgage for $200,000 at 5% interest, your monthly payments would be $1,073.64. However, that payment is broken up differently between interest and principal depending on how long you have been paying. Your first payment of $1,073.64 would consist of $240.31 in principal and $833.33 in interest. In contrast, your final payment would consist of $1,069.19 in principal and $4.45 in interest.
Now consider that since you are paying more interest than principal initially, you will not have even paid off half of your loan after 15 years. If you were to refinance halfway through your first mortgage you would be taking out a mortgage to pay off more than half of what you borrowed initially and on top of that, the initial payments for the new loan will again be mostly interest. It is clear that refinancing for the same loan term can cost you a lot in interest.
One way to ease this problem is to attempt to get a loan that will end at the same time as the original loan. The reduced rate will not be as low as it would have been had you extended the time frame out another 30 years, but if you have a good credit score and some equity in your house then you will still likely get lower monthly payments without bleeding interest.
Attention to Details
All of the above is not to say that you definitely should not refinance to a lower rate. As often as not, you will actually save money in the long run. You just need to pay careful attention to all of the details before you make the decision to refinance or you could wind up in trouble. Never be afraid to ask questions of the lender and do not sign anything until all of the terms and conditions are clear in your head. With careful attention to detail, you could end up saving substantially.
In the end, the decision of whether to refinance is a difficult one. If you feel bogged down in the mire and would like some helpful information that will make the choice easier you could check out Credit Sesame.
So here’s the thing: most of the stuff that we get fed as being green or sustainable is just green-washing. That green window cleaner is not that green. That organic chicken is probably still cooped up in a well, coop somewhere and eating some really disgusting feed with its waste streams totally unregulated and emitting methane. That cleaner-burning diesel is still blowing out carbon emissions and racking up nitrogen oxide emissions. So what’s a girl to do to make it right in this crazy world?? Well, there are things you can do. Really. Unfortunately it’s not just buying a Prius and calling it a day, but it’s not too painful I promise. If you really care about sustainability and climate change, you can take a few steps that are good for your wallet in the long run: because your wallet will thank you for not living in a totally ruined planet that’s toxic to all forms of life. Where do we begin on this fun journey, you ask? Why, you start at home:
1. Eat Less (or no) Meat and Dairy.
The simplest way to reduce your carbon emissions is to lower your meat and dairy intake. Dairy cows and animals grown for slaughter consume massive amounts of feed and water, to say nothing of the volumes of waste produced. The average American eats about 200 pounds of meat and 33 pounds of cheese per year. By reducing the overall demand for animal food products, we reduce the grave demands we place on our lands with these huge farm operations. Yes, we have to eat. And I personally still eat a small amount of organic meat each year (mostly beef or fish) and I’m working on reducing my dairy intake. The tough questions then become how much of an impact organic operations have on sustainability, since they require more land to produce fewer animals. We haven’t figured out yet the balance between humane treatment and less impact on natural resources, but it’s still a good move away from huge demands for animal products, as businesses, farms and government will start to recognize the trend and respond with better organic operations and incentives towards that model of farming (that’s a big leap with plenty of idealism mixed in, but it’s how we start).
2. Carry Your Reusable Bags with You.
I own at least 30 reusable bags and could never seem to remember them when I was in the grocery store. Last year’s Earth Day yielded me two cotton promotional bags that were large but folded very neatly into my purse. Now I never forget my bags and I rarely ever have more than two bags worth of groceries. It’s felt so great to change my behavior, and I am now trying to find ways to avoid plastic bags everywhere. They are what end up in the North Pacific gyre, in pieces so tiny that fish eat them, thinking it’s food and they die because they think they are eating but are only consuming garbage. It’s a freaking tragedy when you see a fish cut open and revealed to be full of tiny plastic “nurdles” or plastic pellets. Plastics are such a HUGE industry that it’s probably impossible to even somewhat diminish their growth any time soon, but there are areas where we can easily remove our use of plastics. Bags at the grocer, retailer, restaurant and in our brown bag lunches are just a few of them. Use reusable stuff when you pack your lunch. Bring your bags, even to the mall or the restaurant. Use a pooper scooper instead of a bag for your dog’s poop (don’t you wish that invention from the movie Envy was real?).
Changing behavior is hard, and people get defensive (don’t you tell me what to do!). When we do change those behaviors those and see tangible benefits, we’ll continue to innovate and take the next steps to preserving our natural resources and showing them respect.
Online privacy is a critical issue for Internet users. When they are online, they want to be assured that their private information isn’t being used for something that it wasn’t intended to be used for. Website owners do have the right to use information collected from their own website, but they must inform their visitors the way in which they are planning to use the data that they have collected. It helps them to streamline advertising, improve content and products and even tailor-make goods to suit consumer requirements. However, consumers have rights to their privacy too, and will stop patronizing a website if they feel the business has invaded their privacy in any way. Because of this, business owners have to walk the thin line between collecting data and still respecting the privacy of their customers.
The revamped policy changed to include detailed information on how consumer information would be used, any third party affiliates the company worked with, and stipulated mandatory parental consent for children under the age of 13. It also offered consumers the choice of deleting their personal information at any time. Although this problem was nipped in the bud, the associated din in the press has not abated. Consumers are now increasingly aware of how much personal information is available online and they are concerned about their lack of privacy.
- Is the policy in plain English? Your visitors should understand the policy and its clauses. There are chances that the generated policy may have unclear English or compromised grammar.
- Does it have an opt-out clause? Customers should be given an option of deleting their account and personal information from your website.
The Bottom Line
There is something intriguing about the trophy wife phenomenon, especially in the sphere of the stratospherically wealthy. I don’t want to hate on trophy wives here, but I just find the whole thing so utterly fascinating and foreign, and I am quite interested when it seems to be working for some of these (in my mind) mismatched couples. First, we need to define what a trophy wife is. This is just my definition, but a trophy wife is generally not the total package, unless your definition of the total package is extremely manicured, with a high premium placed on her looks and appearance. Personally, if a woman is extremely accomplished and also marries someone who is even more accomplished, I see that as less “trophy wife” and more “marrying well”. Yes, they both have negative connotations, but the latter is usually more a result of the situations the accomplished woman might find herself in; as in, regularly interacting with other high-powered people means you may find your match among them. I don’t like the idea of “marrying well” since it implies that if you don’t marry someone who is super rich and successful, then you haven’t married well, but financial security is important to a lot of people (there is no guarantee of financial security but that’s another story).
Back to my point about trophy wives. A trophy wife is an extreme version of a situation that happens often in relationships: one person brings the tools of comfort and convenience to the table (money), and the other is a good companion who happens to bring less of the tools but more of the physical attributes which Person 1 has deemed to be important. Example: Uber-wealthy real estate developer marries a woman 20 years his junior who also happens to have a penchant for pilates, Louboutin heels and never leaving the house without a full face of makeup. Is this wrong or bad somehow? Hell no! People can and should choose whomever they like in their relationships and there is no accounting for taste. Maybe you don’t find a woman who needs to wear a designer handbag everyday and take thousands of Instagram selfies appealing, but some guy out there does. It might seem obscene and tacky to post about your house and your cars and all the stuff you have, but if that’s what someone else likes to do, then go for it. There was a show recently on TLC called the The Secret Lives of Trophy Wives, and here’s just one clip from that show that gives you a pretty good idea what the rest of it will be like. Leyla Milani and Jennifer Stano and the other two less attractive ones are just a few of the myriad trophy wives that populate the LA/Orange County scene. Television shows alone document their proliferation (Real Housewives of Orange County and Beverly Hills and pretty much anything else on Bravo set in California). They’re out there. Some like being called trophy wives. Some celebrate the fact that they don’t work or do much of anything else, and who am I to call them vapid? It’s their prerogative. But I just have a few questions for the trophy wives out there: Do you think there will always be an imbalance of power in your relationship? Do you ever get uncomfortable when you think of the disparity in assets between the two of you? Do you think your husband values your opinions and intelligence? Does that matter to you? Does he truly treat you and other women with respect or does he see you as a caretaker and playing a traditional feminine role, and would be upset if you broke that expected mold? Is there more to the trophy wife life than collection of luxury goods and leisure time? If you don’t Instagram it, did it happen? How much time do you spend with your husband?
I don’t think there are easy answers. The wives of investment bankers often get a bad rap too, but I thought this New York Magazine article was rather humanizing, even through its layers of elitism. I may not want to be one of them, but their story is one I can’t look away from.