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Showing posts from February, 2016

Pay Yourself First

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The principle to pay yourself first has been referred to as the Golden Rule of Personal Finance. The concept is that one of the first checks you write each month is for your own savings. The rationale is that if there is no money left after a person pays their bills, there is nothing to contribute to savings or investments that month. By establishing a priority to save, a person realizes that the balance of their monthly income must cover living expenses and other discretionary spending. This is a much different strategy than saving what is left over from monthly expenses and other spending. Many financial experts have likened an amortizing mortgage to a forced savings account because a portion of each payment is applied to the reduction of the principal amount owed. Some homeowners have taken that concept further with a shorter term mortgage to build equity faster. In the example below, a $250,000 mortgage at 4% interest is compared with two different terms. The 30 year mortgage …

Homeowner Advisory

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Similar to an annual wellness physical, homeowners should consider an annual review of the financial elements of their home. It’s particularly valuable based on the fact that their home and its equity is generally, one of their largest assets. List of similar properties recently sold and currently available Information on challenging property tax assessment Refinance Analysis to: lower your rate shorten the term make improvements eliminate mortgage insurance remove a person from the loan eliminate credit card debt combine loans take cash out of the equity Equity Accelerator to retire the mortgage within a specific period of time Repairmen and contractors recommendations Information on rental property opportunities We’d be happy to provide this information at no obligation as part of our on-going commitment to providing homeowner information, both in general and specifically…

Housing Update | Island of Oahu | January 2016

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The January 2016 stats are out for re-sale housing market on the island of Oahu.  Prices are still on the rise.  Keep your eye on the ball of the mortgage interest rates.  They may begin to creep up as the year progresses.  How is your neighborhood doing?  Hawaii Kai has hit the million dollar median in many of its neighborhoods in recent months.  The January Median Sales Price is $1,092,500, a 20% increase from a year ago at this time.  (See graph below).





It's a Big Difference

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Let’s say that you just won $8,750 on a lottery scratch-off ticket. You’ve decided to be frugal and invest the money and have decided on three alternatives: buying a certificate of deposit, a mutual fund or use the money as a down payment for a $250,000 home.To compare the three alternatives, let’s look at the equity in each one three years from now.The certificate of deposit can be invested at 1.3% in today’s market and you believe you can reasonably earn 5% on a mutual fund. You expect the home to appreciate at three percent a year.The certificate of deposit would be worth $9,096 at the end of three years and the mutual fund would be worth $10,129. However, the equity in the home at the end of three years would be $45,204. That is a four time’s higher yield on the home.One of the main reasons for the big difference is that the buyer benefits from leverage: the use of borrowed funds to increase the results. The $8,750 down payment is controlling a $250,000 investment. The appre…

Is Understanding Costing You Money?

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People tend to fear what they don’t understand. Homeowners understand fixed rate mortgages and remember the horror stories of people who lost their homes because they could no longer afford them when their adjustable rate mortgages went up.Interest rates on fixed-rate mortgages have been so low for enough years, that borrowers haven’t even given much consideration to an adjustable rate mortgage. Changes in the way adjustable rate mortgages are now made make them much safer for borrowers who understand how they work but also know they’ll only be in the home for a limited period of time.Adjustable rate mortgages can go up or down according to an index that the lender has no control. The amount that can be adjusted is limited by caps for each period and for the life of the loan. While there are different periods for ARMs, the most popular lock the first period for five to seven years and then, can adjust annually after that.One quick and easy way to determine whether an adjustable m…