Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
With the launch of our new physician loan program (see details below), I thought it would be quite apropos to address the topic of how crucial it is to have an annual “Mortgage Check-Up”. This subject also comes on the heels of an astonishing report that was just released by Bankrate. According to their recently released survey, when asked about their mortgage, about 30 percent of respondents didn’t know their actual interest rate or were not entirely sure off-hand what range it was in.
From my experience, that number is significantly higher. Certainly, it varies by individual personality, but most commonly I find that unless someone got a remarkably low mortgage rate, as much as 50 percent of homeowners don’t recall off-hand what their rate is, and most don’t know what their original mortgage amount was. For many, the details of the mortgage they received, typically when they bought the home, is irrelevant because they know “rates are off their historic lows.” Yet, when I advise pressed-for-cash clients that I can save them a significant amount of money each month, despite the increased rates – I get a blank stare, but a welcomed challenge.
I spoke with a client this week who didn’t even know why they called me. True story. Their accountant suggested that they talk with me because their interest payments on mortgages and credit cards seemed hugely disproportionate to their income and affordability. After speaking for a few moments, we found many pockets of opportunities to consolidate credit cards and pull out some money to pay off lingering collections that have been haunting them for months.
Most people understand the value of a medical examination at least once a year, yet don’t think that other important parts of their lives deserve the same attention. With the ease of online banking and bill payment efficiencies, many consumers don’t see transaction details on a consistent basis as we once did years ago. Out of sight, out of mind. Moreover, life events happen that might have caused us to handle a transaction one-way month ago or years ago, but one might be in an entirely different fiscal position today.
It might sound like a funny concept, but a mortgage checkup really involves a few fundamental questions about current and future financial objectives. I usually discuss any upcoming large purchases and how they might impact my client’s budget or cash flow; We also address reoccurring expenses and revolving debts to see if those can be handled more efficiently and economically. In some instances, I have discussed short-term and long-term housing plans – such as relocating, upgrading, downgrading or the like which would have an impact on short-term financial and mortgage decisions.
In the same Bankrate survey, they also got feedback that 30% of current homeowners expect to move out of their home within the next ten years. That knowledge and insight is valuable when discussing your financial objectives with your mortgage advisor. Even more insightful in the same report was that over 60 percent of current homeowners said that they don’t plan on moving at all. That determination is mainly based on the lack of homes in the marketplace, the increased price to purchase a new home, and the fact that employment wages (ie: salary increased) have not moved up proportionate to the costs of homes and other ordinary expenses.
All these variables and thoughts are what makes an annual mortgage checkup critical to ensure your finances are aligned with your life events. A mortgage shouldn’t be one of those things you just set and forget. I have seen firsthand, countless times, how homeowners have cost themselves tens of thousands of dollars over the life of the loan.
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