Kevin's Thoughts:

During the last decade, Adjustable Rate Mortgages (ARMs) have increased in popularity among consumers. These days, few homeowners (especially first-time buyers) remain in their homes for more than seven years. In this case, it often makes sense to get an adjustable rate mortgage with a lower rate, especially one with a 5-year or 7-year fixed portion, since they won't have the loan long enough to be concerned about rate fluctuation.

1. Borrowing against your 401(k) for the down payment - The process would simply entail working with your 401(k) administrator and arranging for the loan. For qualifying purposes, we would not count the payments against you, and we would have a solid down-payment for a purchase. The advantage with this process is that you would not have to pay taxes or early withdrawal penalties. You would also still be paying a payment back to yourself and have your long-term retirement funds in place. You will not be earning with the market should we go back up, but you will be paying yourself a small amount of interest. The drawback is that you will have the 401(k) payment.
2. Taking Money Out of your 401(k) for the down payment - Once again, contact your 401(k) admin and let them know that you will be pulling funds. We figure about 30% tax and early withdrawal penalty on this money. The advantage to this strategy is that you will have money in your home post-tax and will not have to pay yourself back. The down-side is that you will be paying for tax and early withdrawal.
3. Using 401(k) to buy cash - If you have enough in your 401(k) and want to purchase a property for cash, you can go to Pensco and set up a self-directed IRA. This is a great way to buy Real Estate as part of your investment strategy. There are some very strict rules to using Self-Directed IRA's to purchase Real Estate...the main one is that you cannot live in it. There are special rules particularly for Defined Contributions...401(k) and Pensco is a great site to direct you in this area. Clearly, this is a more stringent process but a great tool. 

Financial Peace of Mind

It's that dreaded time of the year again, time to start preparing your tax returns. And since 2008 was one of the toughest years in the history of our financial markets, this also may be a time that many of us learn exactly how much of a hit our investments and retirement accounts actually took this year.

With this in mind, the most practical financial advice we can offer right now is to consider a Certified Public Accountant. An experienced CPA not only helps you navigate complex tax codes to save you money and possibly additional financial losses, he or she can also offer a new perspective on your financial goals and needs, providing a peace of mind that we can all really use right now, especially if you're one of many Americans who suffered significant losses in 2008.

Remember, your accountant should be an extension of your overall financial plan, someone trustworthy who you can count on throughout the whole year to provide information and advice you need to succeed. If you need help finding someone you can trust, we'll be glad to refer you to one of the great CPAs we work with on a daily basis to help our clients reach their financial goals. Please, don't hesitate to give us a call.

Mortgage Interest Rates*

Rates as of Monday, 15th December, 2008:

Conforming APR Payment per $1,000 Jumbo APR Payment per $1,000 30 Year Fixed - FNMA/ FHLMC 5.000% 5.175% $5.37 5.500% 5.626% $5.68 15 Year Fixed - FNMA/ FHLMC 5.000% 5.302% $7.91 5.125% 5.337% $7.97 30 Year FHA 5.375% 5.554% $5.60 6.000% 6.130% $6.00 30 Year VA (100% Financing) 5.500% 5.680% $5.68 6.000% 6.130% $6.00 Guaranteed Rural Hsg (100% Financing) 5.500% 5.680% $5.68 N/A% 0.000% $0.00 5 Year Interest Only 5.750% 5.933% $4.79 % 0.000% $0.00 Investor 75% LTV or Less (4 financed or less) 6.125% 6.405% $6.08 % 0.000% $0.00 Investor 80% LTV (4 financed or less) 6.125% 6.498% $6.08 % 0.000% $0.00

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Note: Investor Guidelines are changing rapidly. We have lenders that will go over 4 properties, but on a case by case basis. 80% Finance is subject to change at any time. Jumbo are all quoted at Jumbo Conforming Rates.