Sunday, January 10, 2016

Knitting Potpourri - The Monkey Socks Pattern are finished

So Benne's weather finally hit VT. Thanks, Benne. ;-} Murphy & I walked at 6:30 this morning and I don't expect we'll venture out again til dark.

I saw a TV commercial saying that the new Harry Potter flick opens July 11, a mere 2 weeks away! Thankfully, I am working down the foot of Horcrux sock #1 so I'm sure the pair will be ready for the Big Day. I had been thinking of a companion gift to go with the socks and wondered how the Svetlana-inspired a/k/a Anthropology-inspired capelet might work in fingering wt yarn. Maybe doubled. Wish Lorna's offered some non-wools.

Did you see that Knitpicks launched a new sock yarn, called Risatta?
Content: 42% Cotton, 39% Superwash Merino Wool, 13% Polyamide, 6% Elite Elastic
Weight: Fingering Weight
Gauge: 7 sts=1" on #2 needles, 6 sts=1" on #4 needles
Amount: 196 yards/50 gram ball
Care: Machine Washable/Tumble Dry Low
$4.99/ball. Only the usual drab Knitpicks' colorways are available but the yarn looks intriguing to me since I am deep in the throes of sockmania.

The Monkey Socks pattern are finished. So why haven't I delivered them to the giftee yet? I guess I feel dopey gifting a pair of merino socks when it's 97F outside. It's supposed to be cooler by the weekend. They also seem huge to me. The foot measures 10" which Charlene Schurch says is a size 9.
Here's the leg detail which doesn't show the lacey holes that line each side of each triangle pattern:

sock monkey triangle pattern

These a pics show how the color pooled on each side of the sock in the gusset; at least it's symmetrical. I did have enough yarn to cut out the pooled parts but wasn't sure as I was knitting. Is it too ghastly?

Have you Elann Shawl-alongers seen Amanda's completed Elann Cuzco wrap shawl? For some reason (shyness, I think), she hasn't posted her photos to the KAL blog so go take a peek here: Amanda's Blog. She used Jayne's yarn in my favorite colorway, Green Tea. Bravo Amanda for completing your first shawl!

One of my favorite blogs in my Elann blog crawl is the hysterically funny Minnie's. You must go check out her adventures in dating, post-divorce. Minnie could write for one of the late night talk shows. Minnie's Blog.

Finally, today, something interesting in the Phil Spector trial: a defense expert.
I wiggled out of cat duty. My neighbors (now in Cape Cod for the week) found another friend, a cat lover and cat owner, to tend to their cat issues. I am handling mail and newspapers. Whew.
Jean's sister and BIL are in Corfu, Greece this week for a yoga retreat. Doesn't that sound like the perfect place to be right now?

Mortgage Acceleration – My First Additional Principal Payment

Principal Mortgage Payment

So I just wrote the check for my first extra principal payment. We’re halfway through 2015 and my goal is to apply an additional principal payment with each of my remaining mortgage payments through the remainder of 2015. Ideally, I’d like to send in at least double the amount of principal that is being paid with my standard payment each month, but we’ll see what happens… that might become difficult around Christmas time.

My April mortgage payment had already been made, but I still wanted to get in an additional principal payment prior to my May payment being made, so I wrote a check for $2,500 and sent it in today. This payment will basically be applied as additional principal to my April payment (as long as the receive and process it prior to my may 1st payment), so let’s take a look at what this will do to my mortgage balance and next months principal and interest payments.

Month Amount to Interest Amount to Principal Mortgage Balance
April Payment (No Acceleration) 1,260.57 249.20 237,034.28
Resulting May Payment 1,259.24 250.53 236,783.75
April Payment (With Acceleration) 1,260.57 2,749.20 234,534.28

Now, with the obvios fact aside that I spent an extra $2,500 on my April mortgage payment, let’s look at the resulting July mortgage balance and the resulting principal and interest payments. I’m decreasing the amount I’ll have to pay to next months interest by $13.28 – Yes, this is very small when compared to the $2,500 I just forked out, but let’s consider it over the course of the next year.

Assume I don’t make another additional principal payment, then I’ll be paying $14,857.40 just to interest over the next year, whereas if I had not made the additional principal payment, I would have been paying an additional $15,021.52 to interest over the next year. A differenct of $164.12. I still have 28 years remaining on my loan, so considering just a year is a very insignificant amount, but if we compare it to what I’ll pay to interest for the remainder of the life of my loan, that’s where we’ll see bigger savings. With the additional $2,500 principal payment, I’ll be paying $262,553.97 toward interest over the remaining live of the loan, and without the additional principal payment, I’ll be paying $274,772.74 to interest over the life of the loan. This is a savings of $12,218.77 – just for making an additional $2,500 payment today. More importantly, I’m also shaving 9 payments off of my mortgage, having my final payment of $373.92 coming due on 12/1/2035 rather than 9/1/2036.

Reverse mortgages give seniors who are no longer able to work or generate income a way to leverage the equity in their house to start receiving a monthly income once again. The payments received from the reverse mortgage can be used to pay medical bills, credit card debt, or any other expenses that may be necessary.

Qualifications & Requirements of a Reverse Mortgage

You must be 62 years or older, and the home that the reverse mortgage is being taken against must be your primary residence.

How much money can I get from a Reverse Mortgage?

The reverse mortgage amount will depend on your age, interest rate, and the value of your home. Typically, the more valuable your home is and the older you are, the more money you will be able to borrow with your reverse mortgage. A lower interest rate will also affect the amount of money that you can borrow.

How will I receive the money from a Reverse Mortgage?
You will generally have three different options when choosing to receive money from a reverse mortgage. All of the amounts will be determined by the above criteria. Monthly payments, Lump sum, and Line of credit

Thursday, May 29, 2014

Tricks to Lower Your Mortgage Payment – Is It Possible?

I often get asked if there are any tricks to lower your mortgage payment, and the short answer is NO. However, there are a few ways to decrease your monthly mortgage payment, but those options will require a little legwork on the side of the borrower. With the economy in the state that it is currently in, I’m going to focus on 2 main ways that mortgage payments can be reduced.

Refinance Your Primary Mortgage

Flickr Photo: Uploaded on October 20, 2008 by woodleywonderworks Refinancing your mortgage will typically be the best option, as it can save you hundreds of dollars per month if you’re refinancing from a high interest rate to a lower rate. Let’s look at an example, lets figure that I took out a $250,000 mortgage loan 5 years ago with an interest rate of 7.25%. At this loan amount and this interest rate, my monthly payment will have been approximately $1,705.00 per month. As of the time of this post, I’ve seen interest rates for 30 year mortgages as low as 5.75% – the interest rate will depend on your lender, your credit score, payment history, etc. so you’ll have to talk to a mortgage broker prior to getting a firm rate quote, but for the interest of our example, we’re going to figure that we can get a loan at a rate of 5.75%. For simplicity sake, lets compare a $250,000 loan at 5.75%. At this interest rate, our monthly mortgage payment will be approximately $1,459.00. This is a savings of $259 per month. A couple things to remember are that:

In this example, we figured that we’ve had our original loan for 5 years. If that were the case, we wouldn’t still need a $250,000 loan, we’d actually only need a loan for about $235,950 (let’s figure $236,000 for simplicity). Plugging that amount into a payment calculator will yield a monthly payment of $1,377.00 per month, yeilding a savings of $358 per month.

You’ll have to take into account loan processing fees. Typically you’ll be paying processing fees, points, etc. which could end up being a couple thousand dollars. When I refinanced, I wrote a check for all of these fees ($2,900 in my case), however I believe that you can have these fees rolled into the cost of your new payment.

Trying to Refinance to a Lower Interest Rate – My Refinance Was Denied

With interest rates in the high 4-percents to low 5-percents, now is the perfect time to refinance, especially for those of you who may currently have an adjustable rate loan. If you’re looking to get out of your adjustable rate loan, there is no better time than the present to get yourself into a fixed loan. However, the biggest problem with trying to refinance right now is that many homes have dropped in value, so the homeowners equity may not be what it needs to in order to refinance.

Take my case for instance. When I bought my condo 5 years ago, I paid $290K for it, and at the peak of the market, its value approached $475K, but right now, it’s value is only appraising at about $250K. This sucks, because in order to refinance, I can only borrow 80% of my homes equity, or $200K if my home appraised at $250K exactly. The banks don’t take into consideration that I’ve been on time with ever mortgage payment over the last 5 years, and that I’ve even made extra principal payments in some of those years in order to accelerate my mortgage.

If you have enough equity in your house, now is the time to refinance, but if your home value has dropped, as most homes in the Southern California area have over the past year, you just may find yourself in a situation similar to mine – having your home refinance denied. It’s a very unfortunate situation when someone like myself who takes pride in having great credit has a refinance declined because of the current state of the market.

I’m currently looking at a couple other options that will help me get refinanced, and I’ll keep you all posted if I find a way to lower my interest rate.

Tuesday, May 27, 2014

Wells Fargo Principal Reduction – Is It Possiible?

As with many other California homeowners, I’ve now found myself a bit upside down in my mortgage. I’m still able to pay my monthly payment, but if I wanted to move or sell my house, its just not going to happen. I’ve been reading articles and reports that Bank of America is offering many principal reduction programs in order to keep people in their houses, however I have not heard the same about people stuck in mortgages with Wells Fargo.

Here is some information on how the Bank of America loan modification may work:

Here’s how it will work, according to Bank of America officials: Say you’re deeply underwater on a subprime mortgage you took out from Countrywide Home Loans, which was acquired by Bank of America in 2008. The mortgage balance today is $250,000, but the house is worth only $200,000.

If you meet eligibility requirements, the program could reduce your balance by $50,000 and your new payments would be based on the lowered principal debt and possibly a lower note rate. This would be accomplished by the creation of an interest-free forbearance account covering a five-year period. Assuming you made regular payments at the modified, lower amount during the first year, $10,000 would be forgiven by the bank.

Whatever the case may be, I’m sure that many people are quite a ways in the red and won’t be able to get out of their current home loan situations without the help of their lenders or bankruptcy. It’s an unfortunate situation, but it’s true.

Wednesday, May 7, 2014

How I Plan to Pay Down My Mortgage Faster

My mortgage acceleration plan. Since I refinanced in October of 2006, only about $4,500 of my combined monthly payments have gone toward paying down my principal balance on my house. That means that on average, only about $250 out of each $1,500 mortgage payment goes toward the principal balance on my house. I've seen and read about a few different options for paying down your mortgage balance at an accelerated rate. There are programs that offer a software package, and there are other programs that just recommend to make additional principal payments whenever possible. In my journey to pay down my mortgage faster, I'm going to use the latter of the two options.

I read an article awhile back that said if you want to pay down your mortgage in half the time, all you have to do is send in a payment equal to double the principal each month. So lets take my latest payment for instance: On  April first, my payment amount was $1,791.57 - of this amount, $246.57 went to principal, $1,263.20 went to interest (a waste of money in my opinion) and $281.80 went toward my escrow account to pay for my property taxes. Let's say that I wanted to pay my mortgage down in half the time, then I would simply have to double the principal amount from $246.57 to $493.14, bringing my total monthly payment to $2,038.14. Really not that big of a difference. I could simply make up this amount by not going to lunch everyday - figure I spend on average $10/day on lunch over 20 days, there's $200 bucks right there. Almost the full amount that I need to make a double principal payment. Instead of changing my lifestyle though, I'm going to use the income generated from this blog (and some of my other online ventures) to make additional payments to principal.

To start this, I'm going to be sending in a large principal only payment in during the middle of June so that when my July payment is calculated, more of my payment goes toward principal since the interest owed will be calculated on a lower amount. During June, I plan to send in a principal payment in the amount of $2,500 + whatever other income I can pull from this blog during that time. The $2,500 is my 2007 tax return, and since I haven't blown it on anything stupid yet, I figure that I might as well put it to good use.

Stay tuned for updates on my personal mortgage acceleration program as I'll be creating posts once or twice each month detailing the benefits (and the perils) of putting extra money into my mortgage each month.

2nd Mortgages – Second Mortgage Interest Rates and Refinancing 2nd Mortgages

A second mortgage (2nd mortgage) is a loan taken against your home in addition to the primary mortgage. The equity in your home is used as the collateral for the loan in the second mortgage. Second mortgages are often called subordinate loans because they come 2nd to a primary loan, meaning that if a borrower defaults on the loans, the primary loan is to be paid off prior to the balance second mortgage loan. It is for this reason that second mortgages (subordinate loans) are considered riskier for lenders, and therefore typically come with a higher interest rate.

When is a 2nd mortgage right for you?
There could be any number of reasons why a person would consider taking out a second mortgage. If you have a large amount of other high interest debt, such as credit card debt, it may make sense to take out a second home mortgage to payoff this debt. You may want to use the second mortgage to make an investment, whether it be in the stock market or a vacation property. You may just want to live above your means and buy a boat. The use of the second mortgage will in the end, be up to you. When I bought my first condo, I took out a second mortgage loan in order to avoid paying PMI (private mortgage insurance).

Interest Rates for Second Mortgages
As mentioned above, the interest rate on a second mortgage will typically be higher than the interest rate of a primary loan due to the fact that a default, the first loan is paid of prior to the 2nd. The interest rate will also be determined by the amount of the loan – the larger the percentage of home equity that you are borrowing against, the higher you can expect the interest rate to be.

Before applying for a second mortgage, make sure you talk to your broker and understand all of the details of the loan. Remember that no matter what the amount of the 2nd mortgage is, even if it is only a fraction of your primary mortgage, if you default on the 2nd mortgage, you could lose your home. Be sure to do your research and have a solid knowledge of your budget prior to securing a second mortgage.