4 ways to put your tax refund to good use

This tax season, the average federal tax refund is over $1,900. Tax refunds are a happy windfall for many people, and it’s tempting to spend that lump sum of cash on something fun. However, if you can resist the urge to splurge, here are four ways you can invest your refund toward your financial future:

  1. Reduce your debt. Paying down debt, especially on high-interest credit cards, may save you big on finance charges.
  2. Build your emergency fund. Experts recommend setting aside three to six months’ worth of expenses in a bank account as a safety net in case of unexpected expenses or loss of income.
  3. Improve your home. By investing in upgrades or repairs for your home, you can increase its value and enjoy the improvements.
  4. Save for your goals. Some extra funds could bring you closer to your next vacation, a home purchase or other goals.

Lastly, if you receive a big refund, consider adjusting your withholdings or estimated tax payments. Reducing your withholdings or payments may allow you to receive more in each paycheck rather than waiting for a big refund every year.This material is for informational purposes only and is not intended to provide, and should not be relied on for, tax, accounting or financial planning advice. Consult your own tax, accounting and financial planning advisors for advice for your specific situation.

How to stop the sale of your credit info

You’re probably used to receiving a steady trickle of credit card, car insurance and other financial offers in the mail. When you apply for a mortgage, however, that trickle can quickly become a deluge of marketing phone calls, emails and letters.

Why does this happen? It’s because credit reporting companies are allowed to sell your credit information – and that’s exactly what they do. The businesses that buy your information then use it to contact you with financial offers. These are known as “prescreened”, “preapproved” or “firm” offers.

This sale of your credit details, and the solicitations that often follow, can create three problems for you:

  1. It can be annoying: The large number of calls, emails or letters you may receive can be frustrating, especially when you’re in the process of getting a loan.
  2. It can be misleading: If you’re applying for a mortgage, solicitors may falsely claim to be working with your lender, or they may use other deceptive sales tactics.
  3. It can be risky: The more people have access to your personal information, the greater your risk of identity theft.

Thankfully, the credit industry offers a way for you to block these prescreened solicitations and the trade of your credit information.

You can opt out by calling 1-888-5-OPTOUT (1-888-567-8688) or visiting www.optoutprescreen.com.

While we respect your right to manage your privacy and consider financial offers as you see fit, we recommend opting out for the reasons above. Opting out does not impact your credit scores or credit reports, and it does not affect your ability to obtain new credit.

You may choose to opt out for five years or indefinitely, and you may opt back in using the same phone number or website at any time. Opting out halts the exchange of your information for “firm offers” on all credit and insurance products, including credit cards and car insurance.

If you’re planning on applying for a mortgage, opting out earlier rather than later is usually best. Your opt-out request will be processed within five days, but it may take up to 60 days before the prescreened offers stop. If you’ll be applying for a joint mortgage, both individuals on the mortgage will need to opt out to be protected from the related solicitations. You can read more about prescreened offers and the opt out process at this Federal Trade Commission webpage: https://www.consumer.ftc.gov/articles/0127-getting-mortgage-offers

How the wealthy make money with their mortgages

If you thought mortgages were just for people of modest means, think again. From the upper class to the uber affluent, the wealthy across American make big use of home loans. Even billionaires see a benefit to financing their homes.

Why do people with these kinds of resources want mortgages? It’s an important question, and the answer shows how a home loan can be an asset to almost anyone. Regardless of your wealth or income, here are the ways a mortgage may benefit you:

Getting into a home sooner

Even if you earn enough to save up to buy a home in cash, doing so may take years. A mortgage is often the quickest way to get into a new home and start enjoying the benefits.

Accessing “cheap money”

Mortgages typically have some of the lowest interest rates of any type of lending product. Therefore, borrowing on your home may be a cheap way to keep more of your money or avoid more expensive borrowing elsewhere.

Avoiding expensive withdrawals

Even if you’re wealthy enough to purchase a home outright, getting at that money can come at a price. Dipping into investments, accessing retirement funds or selling off property can result in fees, taxes or losses. Borrowing on your home can be an efficient way to avoid those expenses.

Making smarter investments

If your mortgage has a 4% interest rate (4.139% APR) and your investment accounts are returning 7%, where’s the best place to put your money? Investing comes with risks, but for many people, it makes the most sense to put their extra money where the expected payoff is highest.

Maintaining financial security

Unexpected expenses are a fact of life, and quickly accessible cash funds are often the most reliable safety net. Having a mortgage can enable you to set aside the cash you need to protect your financial security.


For these reasons, purchasing a home using a mortgage, making the standard payments and refinancing the loan when advantageous can be a wise financial strategy. It may even be beneficial to increase your mortgage balance at times by taking cash out to consolidate debt or put toward a home renovation, college tuition or another investment.

This doesn’t mean simply buying a home or getting a mortgage will guarantee you wealth. It does mean, however, that if you want to imitate the successful habits of the affluent, you can start by looking for opportunities in your home financing. Contact us for a free mortgage consultation for your specific situation.

Draper and Kramer Mortgage Corp. does not provide financial planning, investment, tax, accounting or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, financial planning, investment, tax, accounting or legal advice. You should consult your own financial planning, investment, tax, accounting or legal advisers before engaging in any transaction.

Do You Really Need Title Insurance?

Borrowers often ask me if they should purchase title insurance when buying a home. I always recommend that they speak with their attorney so as to make an informed decision. I have always purchased title insurance on the properties I have purchased as I am a believer in insurance as a foundation to any solid financial plan. Why do buyers question purchasing title insurance when the risk of loss is so high? After all, no one seems to question the need for homeowners or rental insurance. I believe the reason is twofold: (1) buyers do not understand the benefits of purchasing it, and (2) title insurance is unlike other types of insurance in that it covers issues that have already happened.

Indeed, there is a long list of risks covered by title insurance, but basically what the buyer is hedging for are the unknown or hidden hazards that might jeopardize his or her ownership in the home. Hidden hazards may include:

  • Liens that were not revealed in title exam or made known to settlement agent prior to closing. Normally, a title exam reveals any liens on the property which need to be paid off and released prior to closing. If, however, the title examiner overlooked a judgment, tax, or mortgage lien on the property or failed to note it in the title exam, the buyer would be liable to pay the lien incurred by the previous owner.
  • Boundary line issues that an accurate survey would not reveal.For example, if a survey failed to note that a neighbor’s shed encroached on the purchaser’s property, title insurance would cover the cost of removing the shed and resolving any accompanying boundary line dispute.
  • Forgery or lack of authority. If there was a forged signature on the deed in the chain of title, or a person or corporation signed a deed without authority to do so, the transfer of ownership to the buyer would be in question.
  • An unknown heir of a previous owner came forth to claim ownership in the property. For example, suppose a seller passed away and his three children sold the house to a purchaser. If an unknown fourth child later came forth to claim his quarter ownership in the house, the purchaser’s title to the property is in jeopardy.
  • Instruments executed under an expired power of attorney. 
  • Mistakes in the public record at the county in which the property lies. 

While lenders mandate that owners purchase lender’s title insurance (which only protects the lender’s interest in the property), homeowner’s title insurance is completely optional. It is a one-time fee that covers the owner for life.


80% of Renters Believe Homeownership is a Part of Their American Dream

According to the latest Aspiring Home Buyers Profile by the National Association of Realtors (NAR), 82% of surveyed renters desire to own a home in the future, with 80% believing homeownership is a big part of achieving their American Dream.

The profile went on to state that 50% of millennials believe that their rent will increase, with 20% believing that an increase in rent will be the catalyst that pushes them to consider buying a home vs. renewing their lease.

So, what is holding renters back?

80% of Renters Believe Homeownership is a Part of Their American Dream | Simplifying The Market

What would make renters take the plunge?

80% of Renters Believe Homeownership is a Part of Their American Dream | Simplifying The Market

NAR’s Chief Economist, Lawrence Yun believes that,

“Housing demand in 2018 will be fueled by more millennials finally deciding to marry and have kids and the expectations that solid job growth and the strengthening economy will push incomes higher.”

Yun goes on to warn that,

“However, with prices and mortgage rates also expected to increase, affordability pressures will persist. That is why it is critical for much of the country to start seeing a significant hike in new and existing housing supply. Otherwise, many would-be first-time buyers will be forced to continue renting and not reach their dream of being a homeowner.”

Bottom Line

If you are one of the many homeowners whose houses no longer fit their needs and are looking to move up to your dream home, now is a great time to list your starter home! First-time buyers are out in force looking to achieve their American Dream.

Whether You Rent or Buy, Either Way You’re Paying a Mortgage!

There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage as opposed to paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.22% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

Buying A Home Is More Affordable Than Renting In 54% Of US Counties

According to ATTOM Data Solutions’ 2018 Rental Affordability Report, “buying a median-priced home is more affordable than renting a three-bedroom property in 240 of 447 [or 54% of] U.S. counties analyzed for the report.”

For the report, ATTOM Data Solutions compared recently released fair market rent data from the Department of Housing and Urban Development with reported income amounts from the Department of Labor and Statistics to determine the percentage of income that a family would have to spend on their monthly housing cost (rent or mortgage payments).

Daren Blomquist, Senior Vice President of ATTOM Data Solutions had this to say:

“Although buying is still more affordable than renting in the majority of U.S. housing markets, the majority is shrinking as home price appreciation continues to outpace rental growth in most areas.”

However, the report also shows that the average fair market rent rose faster than average weekly wages in 60% of the counties analyzed in the report (266 of 447 counties). With rents rising, many renters should consider buying a home soon.

Bottom Line

Rents will continue to rise, and mortgage interest rates are still at historic lows. Before you sign or renew your next lease, let’s get together to help you determine if you are able to buy a home of your own and lock in your monthly housing expense.

Why Is There So Much Paperwork Required to Get a Mortgage?

Why is there so much paperwork mandated by the lenders for a mortgage loan application when buying a home today? It seems that they need to know everything about you and requires three separate sources to validate each and every entry on the application form.

Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.

There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.

1. The government has set new guidelines that now demand that the bank proves beyond any doubt that you are indeed capable of paying the mortgage.

During the run-up to the housing crisis, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again.

2. The banks don’t want to be in the real estate business.

Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.

However, there is some good news in the situation.

The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate around 4%.

The friends and family who bought homes ten or twenty years ago experienced a simpler mortgage application process, but also paid a higher interest rate (the average 30-year fixed rate mortgage was 8.12% in the 1990s and 6.29% in the 2000s).

If you went to the bank and offered to pay 7% instead of around 4%, they would probably bend over backward to make the process much easier.

Bottom Line

Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates.

The Cost of NOT Owning Your Home

Owning a home has great financial benefits, yet many continue to rent! Today, let’s look at the financial reasons why owning a home of your own has been a part of the American Dream for as long as America has existed.

Zillow recently reported that:

“In reality, buying or renting a home is an intensely personal decision, with emotional and even financial considerations that go beyond whether to invest in this one (admittedly large) asset. Looking strictly at housing market numbers, there is a concrete point at which buying a home makes more financial sense than renting it.”

What proof exists that owning is financially better than renting?

1. We recently highlighted the top 5 financial benefits of homeownership:

  • Homeownership is a form of forced savings.
  • Homeownership provides tax savings.
  • Homeownership allows you to lock in your monthly housing cost.
  • Buying a home is cheaper than renting.
  • No other investment lets you live inside of it.

2. Studies have shown that a homeowner’s net worth is 44x greater than that of a renter.

3. Just a few months ago, we explained that a family that purchased an average-priced home at the beginning of 2017 could build more than $48,000 in family wealth over the next five years.

4. Some argue that renting eliminates the cost of taxes and home repairs, but every potential renter must realize that all the expenses the landlord incurs are already baked into the rent payment– along with a profit margin!!

Bottom Line

Owning a home has always been, and will always be, better from a financial standpoint than renting.