My kids think that each time I tell them that doing a special activity or going out to dinner costs too much money, that the solution is to simply drive up to the ATM and get more money to satisfy their wants. Helping children understand the value of money will help them realize the money taken out of cash machines are from the funds you deposit – not just an endless cash flow (don’t we all wish!).

There are several suggestions on how to teach children the value of money and much of it depends on their age and level of understanding. The Institute of Consumer Financial Education provides a list of 18 Ways to Teach Children The Value of Money where it suggests introducing monetary values to children from the moment they can count. Much of the emphasis from the list is geared more towards saving and less on consumption. If this is a value you would like to pass onto your children (and who wouldn’t), having your child use money from their own piggy bank to buy candy, a small toy, or an ice cream treat will give them an opportunity to see how quickly their savings can dwindle and how much their treats cost. Taking advantage of this opportunity to discuss the importance of saving their money for “special occasion” items, above and beyond the small treats they want often, may help the concept sink in. Offering your children a choice between contributing some of their money to pay for the special activity or dinner costs and saving the money for that larger toy, electronic item or help the family pay for a theme park trip they have been begging you for will also help them experience first-hand the benefits of saving money.

It may also teach them how to be more responsible for those things they’ve paid for. One fellow parent recently shared a story with me about how her older daughter kept begging for an iPhone. So she made an arrangement with her daughter that she could get the phone if she saved her money and paid for half the cost. Her daughter dutifully accepted the challenge and saved all of her birthday and holiday money as well as did special chores around the house to earn more – which took over a year to reach her goal. Once she was able to purchase the phone, she has not once lost it in over 2 years. In comparison, the fellow parent stated that her other daughter’s circumstances were different. The father found an iPhone on sale and decided to buy it himself in full for the younger child. She has lost the phone several times in only a few months and doesn’t exhibit nearly as much responsibility for taking care of the phone.

It is also important for children to understand the amounts our currency represent. School aged children who have the ability and patience to follow board games might enjoy money teaching game activities offered at the Enchanted Collar. This website provides books and toy financial aides like play money and a checkbook giving children a fun way to learn about business plans and investments. The toy financial aides help children learn the different types of printed money and improve their math skills. One of the ways I teach my boys the different types of money and how much items cost is when they ask to purchase a snack from a vending machine. I have them tell me how much the item costs and then count out the coins needed to make the purchase. The first time I did this activity with them I was very surprised to learn they didn’t readily know to say one dollar if they saw an item labeled $1. Instead, they might say it was one cent or one money – even though I had seen they were learning about money in their school lessons.

The discussion to have children participate in grocery shopping to help them build good food choices shouldn’t stop with picking out the lettuce and tomatoes. Next time, bring a calculator and have them add up the prices for each item as it is placed in the cart to help them build an understanding of family budgets and the cost of the food and household items they utilize. This may have a secondary benefit when the discussion turns to why they shouldn’t waste food and make the connection that this is like putting money in the trash. It might also keep them distracted instead of hopping on the cart screaming “Yippie Kay yay” down aisle 5 (sorry, I had a flashback moment).

For my boys (ages 5 &7), I decided to start a chore chart with a list of regular chores and then another list of chores they can perform to earn extra money. Additionally, they can find ways to make money by turning in our own empty bottles and cans for the redemption values. This provides an opportunity to incorporate the added benefits of recycling to help save the environment. The idea is to pay them each $2 for every extra chore they perform – with $0.50 of that money going to long term savings, $1 towards the birthday or holiday wish toy, $0.25 towards miscellaneous treats, and the remaining $0.25 towards a charity of their choice. Any birthday or holiday money they receive will now be divided in the same outlined manner.

Once the boys have saved at least $100 in their long term savings, I will take them to the bank and have them open a savings account. This will help them see how their money grew from one dollar at a time to actually putting money in the bank with their own savings ledger. Sitting down with the statement every month and discussing how much money they put into the account, how much interest was earned, and the importance of having money in the bank will help them understand that it’s ok to have open conversations about money and finances.

An article posted on Family Education’s website title, Kids, Allowance and Chores discussed how some experts interviewed suggested that paying children for all of the chores performed in the house would give them a since of entitlement when they get older and are asked to perform tasks above and beyond their normal job duties. The argument made is that they may feel as though they should be compensated to stay a little late to complete the year end budget reports or when asked to pitch in shared duties in a small office setting. Along side my list of chores, I also made a list of the special toys with the estimated cost from their birthday wish list. We established a percentage they would contribute (20%) and their father and I would pay the difference. I’m hoping it will teach them how much their big item toys cost so when the list expands from one Lego City set for $100 to include Teenage Mutant Turtles figures, and some other super hero toys, they can look at their own piggy bank and scratch their heads while trying to decide how to pay for it all – or choose to put something back because they don’t have enough money.

There are many ways to teach children the value of money while also incorporating your own family values. The most important lesson in all of this is the earlier the conversation occurs, the better. If more parents taught their children the value of money at an early age then I’m confident less homeowner’s would have experienced the negative effects of our recent financial crisis. Being at the forefront of that ordeal certainly influenced my decision to buy my kids a very large piggy!

The post Teaching Children The Value of Money appeared first on Golden Coast Finance.

Often, the average consumer is curious about the difference between the loan officer who sits in your bank’s lobby versus the mortgage broker your agent or next door neighbor recommends. The bank’s loan officer will readily have your deposited assets at their fingertips and you may be more comfortable speaking to someone you have cordially smiled at over the years when you walked into the bank. However, this ‘comfortable convenience’ may limit your options.

The bank’s loan officer can only discuss products which that particular bank offers. For example, if you are seeking a cash-out refinance of up to 90% loan-to-value (LTV) your bank may only offer loans with cash-out up to 80% LTV. In this case, the loan officer will shake your hand with that same great cordial smile and say, “Thank you for coming in. Here’s my card and give me a call when home values in your neighborhood increase.” However, if you had approached the trusted mortgage broker your neighbor suggested, the conversation might begin with, “Thank you for contacting me. I am a direct lender with several banks and I have two of them in mind that I know offer that loan.” Now, you can proceed with whatever plans you had for that cash-out request as opposed to sitting around for another couple of years waiting for your home to appreciate 10% more in value.

Another key difference is that mortgage loan officers are being held to higher licensing standards as a result of the financial crisis in 2008. The Dodd-Frank Financial Reform established the S.A.F.E. Act (Secure and Fair Enforcement for Mortgage Licensing) requiring all loan officers effective January 2010 to be licensed by passing both a National and State exam, complete home loan related pre-licensing education courses, and to complete continuing education classes annually to keep their license in good standing. None of these licensing requirements are imposed on bank loan officers whose only requirement is to register with the Nationwide Mortgage Licensing System (NMLS) and are not required to take education classes, ethical training, or testing.  As a result, when you speak to licensed mortgage loan officers, you can be certain that they have both mortgage industry and product knowledge, are better educated on pertinent topics, are more strictly regulated by federal and state laws, and typically can provide you with more options to help you reach your financial goals.

So the next time your neighbor looks over the front yard hedge and gives you their mortgage loan officer’s phone number, think to yourself – what a relief, now your son Billy can finally get those braces before he gets all his teeth kicked out playing soccer!

The post Why Choosing a Licensed Loan Officer Over a Bank Home Loan Officer Can Be Financially Beneficial appeared first on Golden Coast Finance.

by Guest Contributor Gabriel Knight

The average home buyer can save thousands of dollars on taxes due to the benefit of home mortgage interest deduction. Therefore, American home buyers can afford to purchase homes as the deduction reduces the amount they pay in taxes. According to the latest research, the 37% of US home buyers spent a considerable part of their income on their mortgage. Therefore it goes without saying that consumers generally have more money in their pockets when they pay less on their mortgage

One of the benefits that drive renters in America to buy homes is the mortgage interest deduction benefit. As a result, there is an incessant rise in the number of home buyers in the US vs. other countries lacking this tax benefit. This reform in the rule is beneficial for the homeowners as it ensures stability of the housing market.

Know how the deduction works

Tax payers who own homes can deduct mortgage interest on their primary, as well as secondary, homes. They need to ensure that the mortgage debt exceeds $1 million and interest lingering on home equity debt is nearly $100,000, to avail the benefit of interest deduction.

Suggestions to cut back on the mortgage interest deduction could be seen as a threat to home buyers.

The total foreign holding of US debt amounts to a record high of $5.48 trillion (as of October 2012). Therefore, the Federal government is planning to cut back the mortgage interest deduction, in an effort to deal with the exorbitant budget deficit.

Some of the other suggestions being considered by the federal government to deal with the budget deficit are:

1. Reducing the mortgage interest deduction for upper-income taxpayers so that they may only receive 28 cents on the dollar, despite being in the 33% or 35% tax bracket. They can currently deduct 33 or 35 cents on the dollar, respectively.

2. Reducing the $1 million cap on interest deduction to $100,000 annually.

3. Altering the mortgage interest deduction with a 15% tax credit.

There were other suggestions were proposed by members of Congress for limiting the mortgage interest deduction; however the other proposals did not gain traction.

Opinion: Those against the reduction in mortgage interest deduction

Is mortgage interest deduction considered to be a boon for the middle income group, especially who’re regular on their US income taxes? In reality, eliminating the mortgage interest deduction may have a negative impact on the housing market.

• According to the National Association of Realtors, more than 60% of the families claiming the mortgage interest deduction have household incomes between $60,000 and $200,000.
• Some of the high-income taxpayers who live in posh areas like California and New York would be under the pressure of higher taxes; due to lowering the $1 million cap.
• In the US, homeowners pay 80% to 90% of the income tax collected across the country.  The majority of these homeowners are middle-income earners. Therefore, these changes would have an effect on our largest source of taxpayers across the country.

Opinion: In favor of the reduction of mortgage interest deduction

Arguments in favor of the mortgage interest deduction may hover on who benefits from it.

• Higher income taxpayers can currently exploit the mortgage interest deduction, and use it to itemize deductions by purchasing more property. Nearly 90% of taxpayers’ earning more than $100,000 itemize this deduction, but only 18% of taxpayers earning less than $50,000 follow suit.
• Reducing the mortgage interest deduction will be beneficial for the federal government, as it will create the funds needed to lower the deficit considerably; although it is not a solution to our overall problem entirely.

Therefore, favoring the mortgage interest deduction ensures stability in the housing market, and encourages many middle income families to pursue home-ownership.

The post Mortgage Interest Deduction: Is it really crucial for American home buyers? appeared first on Golden Coast Finance.

Interest Rates…  This article should end here, but alas we will elaborate for those of you who may be hiding under a rock somewhere reading this magazine and are cut off from the outside world! 

Over the past 30 years we have witnessed a gradual decline from the highest interest rates in US history to the lowest interest rates in US history.  So what do we do?  Buy. Buy. Buy. Right?  Absolutely, but what if your rich uncle didn’t just pass away, and growing your real estate portfolio just isn’t in the cards right now?  Well, I am happy to report that you are not out of luck.  While we do subscribe to the “buy land, God isn’t making any more of it” philosophy, the transcendentalist in us says that we can live by more than one saying.  In fact we created a saying that fits this situation perfectly:  “Got Land? Grow Something With It!” (No, we are not referring to starting a farm in Glendale, CA).What we are saying is that you need to leverage your property, and grow your wealth.  How?  By refinancing!  Through a refinance you essentially repurchase your property, with a new mortgage, at the prevailing interest rate.  This means that for a nominal fee (which can often be rolled into the refi, costing you almost nothing), you can trade in your 6%+ interest rate mortgage for a shiny new 3%’er.  Even more importantly, depending on the amount of equity you have in your property, you can generally cash out quite a bit of money (the difference between what you owe and what your property is worth).  After all, another favorite saying of ours is “cash today is better than cash tomorrow!”

The benefits of a refinance can be staggering, but there is no guarantee that interest rates are going to remain this low for very long.  Furthermore a refinance is not right for everyone;  and while there are refinance programs available to accommodate homeowners without equity in their property (such as HARP), we strongly advise against it.  The reason we do not encourage an underwater refi, is simple:  while your interest rate would come down, your property would still be worth much less than what you owe on it.  Whether you can afford the payment or not is a moot point, when you are talking about making payments on an investment that is not going to be worth anything for twenty or thirty years.

Now that you have read this primer on refinancing take a moment, digest it, and then call an expert.  The first step in making an appropriate decision about whether to refinance or not, is having an accurate idea of your property’s value.  After you compare your property’s value to what you owe on it, the answer will present itself!

The post Refinancing: Got Land? Grow Something With It! appeared first on Golden Coast Finance.

Mortgage News – The FHA Streamline Refinance Program

On June 11, 2012, the launch of the new FHA Streamline Refinance Program is going to blow all the other refinance programs out of the water. The benefits of this new program and its easy requirements seem like getting a refinance on a loan is going to be a breeze.  Here are the reasons why!

If you qualify

• No verification of your income or employment status is necessary.
• No new credit evaluation, credit reports, or FICO scores will be conducted.
• No new physical appraisal will be completed. (Your home value will be equivalent to the same value you purchased it for even if the value of your home has dropped tremendously.)
• You will not get any prepayment penalties.
• You have the choice to get either a fixed rate or adjustable mortgage rate.
• You can choose between 15 or 30 year terms.
• The rates offered are below 4%.
• The Upfront MIP will be reduced from 1% to .01%
• The Monthly MIP will be reduced from 1.10%-1.15% to .55%

Why is this better than other programs out there?

For one, the actuality that they don’t verify your income or employment status is a huge help to homeowners who are not making enough money, but are struggling to make their payments. Part of the requirements for most of these programs is that the homeowner must be current for the last 12 months of payments. So if this is true? And they have verified that the homeowner is responsible enough to make all their payments even in tough economic times, then why penalize them and refuse a modification because they just are not making enough money. Isn’t the point of refinance to help these homeowners who cannot afford paying their payments anymore?

Additionally, the fact that they don’t check credit or FICO scores is a great benefit to homeowners who have experienced hardships and do not have the best credit at the moment.  By looking past these mishaps, they are helping these struggling homeowners who are just trying to get by, and who do not want to lose their home because of an unlucky streak they have recently experienced.

Moreover, there will not be any physical appraisal requirements to qualify. No homeowner will need to pay $500 to $600 just to find out their home is not worth as much as it used to be, or it has problems now that do not meet the FHA requirements. Best of all, no appraisal = less paperwork = less processing time.

Finally, the MIP will be reduced enormously!!!!  Let’s say you owe $300K on your loan and you are doing a 30 year term.

The amount you would pay now if you started the Refi program would be:

• $3,000 for the upfront MIP rate of 1%.
• $287.5 a month with a 1.10% MIP rate
• $375 a month with a 1.15% MIP rate.

With the new rates, your MIP payment/ fees for the same loan will look something like this.

• $30 for the Upfront MIP of 0.1%
• $137.5 a month with a .55% monthly MIP rate.

With rates like that your upfront fee is practically equal to a night at the movies and with the monthly MIP rate you save almost $2000 a year.  How wonderful is that?

To Qualify

• Loan must be FHA insured and must be put on the Federal Housing Administration before May 31, 2009.
• Loan cannot be backed by Fannie Mae or Freddie Mac
• No VA, or any private Investors
• Must be current with payments and not have missed a payment in the last 12 months.
• Refinancing must provide you a net savings of at least 5% in your monthly principal, interest, or mortgage insurance payments.

Isn’t it great to know that as long as you meet these easy requirements, then nothing more is necessary to save you some money?

The post The FHA Streamline Refinance Program: What it is & Why you want it! appeared first on Golden Coast Finance.

Mortgage News – The Home Affordable Refinance Program

HARP: Help for Homeowners who have been Responsible 

So the economy hit you right in the pockets and everything you worked so hard for seems to be slipping from your fingers.  To top things off you are worried that you cannot afford your home anymore. You try to refinance, but you find out your home is not worth what it used to be and you actually owe more than your property is worth. You approach lender after lender and they all give you the same bad news. You do not qualify. What options are you left with? What happens when you cannot even sell your home for profit because you owe more than what it’s worth?

For those of you in this situation, there is still hope.  Fannie Mae and Freddie Mac may be two names that will work to your advantage. Extended until December 31, 2013, The Home Affordable Refinance Program (HARP) was created to assist those who have mortgages backed by the nation’s two largest guarantors. The purpose of the program is to help home owners who are less fortunate because of the drop in their home values losing all equity. Although the HARP program was established in 2009 to help homeowners, the cap on the LTV ratio has been removed. What does this mean? You can owe more than your property is worth and still be able to refinance!

So if you are curious to know what it does and whether you qualify, the following is the meat to your spaghetti.

If you qualify

• The program lowers your interest to the current prevailing rate.
• You start fresh with a new loan and lower payments.

To qualify

• Your loan must be backed by Freddie Mac or Fannie Mae.
• You must be current on your mortgage payments.
• You must owe more than your property is worth.
• Your loan must be closed on or before May 31, 2009.
• You must have never refinanced through the HARP program previously.

The last few years have been hard on homeowners and to say the least it’s not fair that those who been responsible and made their payments on time are now experiencing hardship. The rise in expenses, the cuts and losses in their jobs, and the dive in the value of their homes are just the beginning of their troubles.  The HARP program is a reward for those individuals who are working hard to do what is right but could use a little assistance.

The post Mortgage News – The Home Affordable Refinance Program appeared first on Golden Coast Finance.

Welcome to the section of our website where we get to provide you with some inside information on how the mortgage industry is running day to day.

Through here you will be able to find out not only what is going on in the industry, but also how it could affect you.

We strive to stay abreast of all pertinent changes in the “biz”, and hope that by relaying this information we may aid you in making more informed decisions.

If there is ever any topic you would like researched or discussed please submit it to us, and we will jump on it for you.

Regards,

Your friends at Golden Coast Finance

The post Mortgage News! appeared first on Golden Coast Finance.