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Why Home Ownership Matters – A 2019 Resolution

January 5, 2019 / Tom Bonetto

Is a home purchase on your 2019 “to do” list?

If so, now is a great time to do it, as market conditions are quite good!

Homeownership has traditionally been an important way to build wealth and the financial returns on homeownership have been more far more beneficial than renting for most homeowners.

Your home is likely the biggest investment you will make in your life, which brings with it some fear and anxiety. Don’t let it! While home ownership may seem a bit scary, buying your home should be an exciting time.

Enjoy the process and engage the right people.

“Twenty years from now, you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”
Mark Twain

Why Home Ownership is Important

According to a Trulia report, “buying is cheaper than renting in 100 of the largest metro areas by an average of 37.7%.”

That may have some thinking about buying a home instead of signing another lease extension, but does that make sense from a financial perspective?

In the report, Ralph McLaughlin, Trulia’s Chief Economist explains:

“Owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”

The report listed five reasons why owning a home makes financial sense:

Mortgage payments can be fixed while rents go up.
Equity in your home can be a financial resource later.
You can build wealth without paying capital gains.
A mortgage can act as a forced savings account.
Overall, homeowners can enjoy greater wealth growth than renters.

More Statistics

87% of people said owning a home is part of their American dream
A typical homeowner’s net worth was $195,400 while a renter’s was $5,400
Academic studies have shown that homeowners are healthier. This result arises from a better sense of self-control and self-worth among homeowners versus renters
Owning a home is good for the economy. With each home sale there are expenditures related to lawn care, home remodeling, new furniture, mortgage origination, moving, and an inducement to build new homes

Infographic courtesy of Trinity Homes

Other Benefits

Homeownership benefits the homeowner’s family and their surrounding community. This includes improved health and school performance for children, increased civic engagement and volunteering, reduced crime, and higher lifetime wealth.

When taking a look at the lessons learned from the last housing crisis, the Bipartisan Policy Center’s Housing Commission noted that homeownership can “produce powerful economic, social, and civic benefits that serve the individual homeowner, the larger community, and the nation.”

The reason is fairly simple: economics. When someone owns an asset, they are more likely to engage in behavior that ensures its future value. You can find out more here from US News and World Reports….

Unlike stocks and bonds, a home’s value is determined by both the physical quality of the structure as well as the general character of its neighborhood.

That means homeowners are more likely to spend their limited time and resources engaged in improving their neighborhood, if for no other reason than to protect the value of their investment.

Bottom Line

Before you sign another lease, perhaps you should sit with a mortgage professional and real estate agent in your area to better understand all your options.

Let 2019 be the year you make the move into your own home!

Weighted Baseballs – Velocity Silver Bullet or Front Row Surgical Ticket?

January 5, 2019 / Tom Bonetto

Weighted baseball training has been a widely debated prescription for increasing throwing velocity since the first research on it was published in the 1960s, though it has gained greater attention in the last twenty years.

Why Weighted Baseballs?

These types of training programs utilizing weighted baseballs continue to rise in popularity for pitchers of all levels. At the same time, scientists are not entire sure about why they may improve velocity, the long-term effects on the body, or the most appropriate program to perform.

From Mike Reinold at Elite Baseball Performance:

There has been a recent increased emphasis on pitch velocity within the amateur and professional levels of baseball. According to Pitch/FX data, the average fastball velocity in MLB has gone up each year since tracking began in 2008, from 90.9 MPH to 93.2 MPH in 2017. Previous studies have shown both a correlation between increased pitch velocity and increased elbow stress and elbow injury rates. Thus, it is not surprising that injury rates continue to increase in a nearly linear fashion with increased average pitch velocity.

One Side

From Brett Pourciau at TopVelociy on a recent study:

Yes, weighted baseball training causes serious injury. It is a hard reality, but anything that tries to force a physical gain in a short period of time, in a sport that already has a pattern of throwing related injury, usually comes with serious consequences. The problem today is, either people are ignorant of this or they don’t care.

You can read the complete article here….

Brett is a biomechanics specialist and a consultant with Major League Baseball

The Other Side

From Driveline – a big proponent of weighted baseballs:

Research backs up the use of underload and overload training in various forms, and it’s no surprise that it works for baseball pitchers as well. Dr. Coop Derenne is the foremost expert in this field and has published a number of research papers that indicate that weighted baseball training creates a significant increase in velocity for those training with underweighted and overweighted baseballs. His most popular paper is Effects of Under and Overweighted Implement Training on Pitching Velocity, which concludes that training with either underweighted (4 oz) or overweighted (6 oz) baseballs improved pitching velocity when compared to simply throwing normal baseballs.

What’s Next

Well, if you are coaching young players, do your research first. There seem to be two sides of the coin here, but my take is to be extra conservative with the younger set. Their bodies are not physically mature and they can injure easily.

Don’t be that coach/dad that pushes your player so hard that they break down prematurely.

Great Christmas Gifts for the Baseball Minded

December 1, 2018 / Tom Bonetto

Paul Petricca’s Hitting With Torque

This is a fantastic read – not only from the physical adjustments that must be made, but to the mental side, as well. Get in your ready hitting position early, players!

Paul is the hitting coach at Wheaton College in Chicago, and I know him pretty well. He works with both softball and baseball players to maximize their power from the ground up.

Ken Ravizza and Tom Hanson’s Heads-Up Baseball 2.0

Two of my favorite and “go-to” mental guys in the baseball world are Dr. Ken Ravizza and Tom Hanson. I’ve mentioned them before – and I’d highly recommend that you read their book and take it to heart.

Steve Springer’s Quality At-Bats “Mental Side” CD

Steve Springer is the former mental hitting instructor for the Toronto Blue Jays and one of the best instructors out there. I’d invite you to visit Quality At-Bats site to find out more about him. His “Mental Side” CDs are fantastic and can really help a player learn how to find the right mental state prior to competition.

Jeff Passan’s The Arm

For three years, Jeff Passan, the lead baseball columnist for Yahoo Sports, has traveled the world to better understand the mechanics of the arm and its place in the sport’s past, present, and future.

Totally worth the read for parents and players

Zepp Baseball Swing Analyzer

The Zepp product helps players by giving information on everything imaginable From hand speed to the amount of time it takes to make an impact, this device provides a wide variety of data. It can even help by pairing to the camera on your phone or tablet to create HD videos that players can use. Hitters can compare their videos to the 3D models that the tracker makes.

This device can create custom training programs to help the hitter figure out what they need to do to improve.

Debt Consolidation Refinance – Estimate Your Monthly Savings

December 1, 2018 / Tom Bonetto

Featured Image: Jake Rustenhoven (gotcredit.com), Flickr

Tapping into home equity with a mortgage refinance is becoming very popular for many borrowers.

Many borrowers can now save hundreds, possibly thousands on their overall monthly payments by consolidating debt inside of a new mortgage.

As housing values across the country have appreciated nearly 35% over the last 5 years, homeowners now have access to a much larger source of equity.

With current mortgage rates still historically low and home equity on the rise, it’s a perfect time to refinance your mortgage to save not only on your overall monthly payments, but your overall interest costs as well – and take best advantage of today’s tax implications.

Improve Your Debt Profile

Using a refinance to reduce or consolidate other debt like credit cards, student loans, home-equity lines, and car payments is a great reason for a cash-out refinance.

We can look at the weighted average interest rate on a borrower’s credit cards and other liabilities to determine whether moving the debt to a mortgage will get them a lower rate. Some borrowers are saving thousands per month by consolidating their debt through their mortgage.

An Example

Let’s assume that you purchased your home 6 years ago (or longer) for $270,000 and you currently have a little less than $200,000 remaining on your existing mortgage.

Well, that home today may well be worth in excess of $350,000!

Even if you’ve refinanced since and have an interest rate in the 4% range, if you have any other sources of debt, a refinance will most likely result in a large monthly savings.

Debt List

Let’s assume you have a debt list that looks something like this – or a combination of similar liabilities:

A few credit cards, a car payment, and a student loan (or even a home-equity line of credit) can easily total nearly $50,000 overall and over $1,000 per month. Many of the customers that work with me are in situations very similar to the one listed above.

New Payment and Monthly Savings

So, when you combine all of your liabilities into the mortgage, here’s what your new overall payment looks like:

Note that the monthly savings is nearly $900 per month!!

New Loan

Here’s what a new refinanced loan might look like:

Your loan amount has increased by about $50,000 – and your mortgage interest rate has also increase by over 1.25%. However, your OVERALL interest rate of all debt will most likely be similar to where you are today (assuming credit card debt is more like 15% or more). Also, you will only have one payment to manage – versus balancing multiple payments.

Better Options

Now, let’s do a little more math…

Let’s say you take that $900 in savings every month and apply it to the new mortgage:

That’s right – you would save $55,000 over the life of the loan and reduce your number of payments by 213! You would be turning your 30-year mortgage into a 12.25 year version.

The numbers are staggering. One other thing to do would be to check with your CPA or financial advisor, as the interest on the new loan would most likely be tax deductible, whereas any home equity lines and credit card interest are generally not tax deductible.

Please do reach out to me right away and we can take a look at your current scenario to see if a refinance might be a good option for you, as it would be my privilege to help!

Home Pricing Data Explained: Continued Appreciation Expected

November 11, 2018 / Tom Bonetto

Many buyers ask me about home prices, interest rates, and if now is a good time to buy.

Some are disappointed that they didn’t make a move 18 months ago and have decided to “wait and see” in hopes that prices and interest rates will actually go down.

The Forecast Data

The graphic shown above is very, very important for current and would-be homeowners, as well as those in the real-estate profession in general.

Home prices are continuing their solid rates of appreciation – and most experts believe they will keep climbing into 2019, although not as rapidly.

The graph above shows that home prices escalated 5.6% year-over-year – and that the CoreLogic forecast for 2019 is that housing will continue to appreciate at a 4.7% clip.

It’s really important to understand that home prices are in no way projected to go down. They are just increasing at a slower rate than over the last 2 years.

Many potential buyers are sitting on the fence, waiting to see if the market has “topped-out”, but as you can see, this is not the case.

You can find out more about why there is no bubble and why 2018 looks nothing like 2007 here…

The CoreLogic/Case-Shiller indexes help securities investors, mortgage banks, servicing operations, and government agencies make property valuations, assess and manage risk, mitigate losses, and control appraisal quality.

In essence, these guys are the best in the business in real-estate pricing data and forecasting. Interestingly, their forecasts have actually been quite conservative – they’ve been on the low side when predicting appreciation over the last few years.

Yes, forecasted growth will most likely slow some, but not by much…and remember, this shows that appreciation is increasing at a slower rate, not a loss in value.

Interest Rates

Secondly, based on the latest economic data and comments from the Federal Reserve, there’s very good reason to believe that interest rates will continue their ascent. You can find out more about that here….

Now is not the time to sit on the sidelines if you are looking to purchase residential real estate. If you wait another 18 months, I’m sure you will be looking back wondering why you didn’t act in 2018.

If you would like to discuss this more in detail, please do reach out to me, as it would be my pleasure to help!

The Lending Coach