Home Mortgage, Interest Rates, Mortgage Rates, Stock Market
March 21, 2021
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On this podcast, we go to Suze School to learn about the latest with the 2021 Stimulus, interest rates and refinancing your mortgage. Plus, what’s happening with the Stock Market and BitCoin.
March 21st, 2021. Today we are going to Suze school for this entire session. So, you may very well want to sit down, take out some paper, a pencil and everything because there's going to be a lot of numbers now. Last week, I was told by my sister in-law Lynn, too many numbers. I have to listen to that podcast over and over again. Suze, there were so many numbers. Well, listen, everybody sometimes you have to understand numbers, because, you know, what I've learned over all these years is that words can lie. But numbers normally tell the truth. And if you just follow the numbers, it usually leads you to what you need to know. So don't be afraid of numbers. Numbers aren't any big deal. Don't sit there and all of a sudden, scared to go. Oh, my God. She's talking numbers. I can't listen to this. Oh, yes, you can. And yes, you will. So, let's start first with the first number. That's so important right now. I can't even tell you and that number is what it is. March 31st. And the reason that March 31st is so important is that is when the ultimate opportunity savings account with Alliant most likely is going to go away. If that changes, I will announce it on March 28th. But that's a whole week from now. So, we really we really, really, really have to open up those accounts right here. And right now, you cannot pass up that opportunity. Do you hear me? Alright, enough about that. Next number, May 17th. Now, this is a great number because this is the number that's extending the deadline for when your taxes need to be paid and filed or extended from April 15th. Fabulous, right. Now, why is that fabulous? Let me tell you, because the IRS has decided to extend the federal deadline and you need to check out for your state. Are they all going to extend as well? Maybe. Yes, maybe no. Most do. But once in a while, one of your state says I don't care what the federal government is doing. I'm going to stick to April 15th. So, no matter what the federal government does, sometimes your state sticks with the normal deadline. However, because this date now is extending, you now have more time to do what to do. A few things. Number one, open up a traditional IRA or a Roth IRA. You are able to open up retirement accounts for the year 2020 and for many of you, you were not able to fund a retirement account because you didn't have the money to do so. But now you might have the money to do so. Why? Yes, because maybe in your bank account you are seeing a stimulus check that has arrived. Maybe you need it. Maybe you don't. You never know your situation, but now maybe that gives you extra money to put into retirement. If you already funded your retirement accounts, what do you do with that stimulus money? If you really don't need it to pay bills and things like that, because there are many of you out there that don't. Put it in your Alliant Credit Union account so that you can get one of the highest interest rates that you're going to find anywhere 0.55% interest and If you do put in that $100 a month every month for 12 consecutive months, you'll get another $100 which is a 16.7% return on your money. That is why I keep harping on it everybody do it, do it, do it! How happy would I be next Sunday? Next Sunday? I'm able to say, Guess what? Guess what? They extend it. I'm asking them to extend to the end of this year. They are considering it and they will tell me shortly. So, also don't forget to watch me on the 27th and 28th. I think it's 9 PM on the 27th, and I think it's 2 p.m. on the 28th. But watch me on HSN, where there is a deal of a lifetime for all of you. All right, but back to May 17th. So that is a great thing now for all of you. You have some breathing room. It's also great for a lot of you because it is possible because you didn't file your income taxes yet and maybe you wouldn't qualify for the stimulus check. If you did file your income taxes, then they are going to be using your 2019 income taxes so you might be qualifying for the stimulus based on that. Because why you didn't file 2020 income taxes yet. And maybe you made over the adjusted gross income limitation for the current stimulus check. Now, if you did file your 2020 income taxes, listen to me closely, because we got an email about this. And it turns out that in 2020 you happen to make 163,000. That's just say, this is your situation. 163,000 of adjusted gross income, you are married filing jointly. That means you do not qualify for the stimulus check because the maximum is for a couple $160,000. However, you could now go and file a 1040-X form, which allows you to amend your 2020 tax return because what you can do now and now you have time, in essence, to do it, because now it's not till May 17th. You could amend that, and you could simply if you have the money to do so, absolutely fund a $7000. Let's say you're over 50. You could put $7000 in a traditional IRA for yourself, $7000 for your spouse, and that would be $14,000, and that would bring down your adjusted gross income. To actually under 150,000 which entitles you to the full $1400 stimulus check for you, your spouse and maybe your kids. If you still have kids that are dependents, so that's something for you to think about again. I know a lot of you get so aggravated at me and say, but Suze is that ethical. Here is what I have learned over all the years that I have been doing. This is something is legal and it can help you financially, and those were the laws that they happen to put in. There's no reason why you should not take advantage of it seriously, and it's just that simple. It is my job to tell you what is possible for you to do. It is your job to decide if you want to do it or not how you feel about it, but that's just what you have to decide. My job is to educate you as to what is possible. Now, if you haven't received your stimulus check and you think you really should be getting one, just go to IRS.gov check word says there you'll see it, get my payment and you'll see the status of your check. Now, you may find that you should be getting a check. Listen to me closely. Now. There was a loophole in this stimulus package that was not part of the previous two. And it allows your creditors not the IRS not for child support, but people that you owe money to seriously debt collectors to seize these checks. Now there is a new bill that they have presented to close this loophole. But it may just be possible that some creditor seized your payment, but you need to check that out. You may also find that there are strange account numbers that you don't quite understand when you go to get my payment. That says your check was sent to this bank account number. It may be not your bank account number that you normally use, but it may be the account number of the debit card that they are sending you, so do not freak out on that. So those are just a few of the things that I want you to know about your tax filing date as well as the stimulus checks, something to think about there. Next, I want to talk to you about interest rates. Do you know that the interest rate on the 10-year Treasury note hit 1.7% last week, which is the highest it's been in 14 months now? Why does that affect you? It affects you because mortgage rates the interest rates on mortgages are based on the 10-year Treasury note. Just that simple. So, you will also see that for the first time in a long time, interest rates on mortgages have absolutely increased to now above 3% for the 30-year mortgage and in about 2.5% or so for the 15-year mortgage. So, I want to talk to you about the cost of refinancing because we're in a period of time now where nobody really knows where interest rates are going to go. In terms of the 10-year Treasury note. But it's important that if you are deciding that you are either buying right now or mainly, a lot of you are thinking about refinancing even more than buying homes. You're even thinking about refinancing your homes, and I've noticed that people have pulled back. They think interest rates have gone up now. We're not going to refinance. I really want you to think about if it makes sense for you to refinance a home or if it does not. So, I just want to do a quick Suze school here. You have to know that you are going to be staying in this home long enough to recoup the amount of money it's going to cost you to refinance. You cannot just look at this and go, oh my God, I'm going to be able to refinance still right now, and I'm going to be able to save $100 or $200 a month on my mortgage. But what is it going to cost you to refinance? Because if you cannot recoup all of the refinancing costs, it does not pay for you to refinance. It also does not pay for you to refinance If you are going from a 30-year mortgage that you originally took out, you have 25 years left on it, back to another 30-year mortgage that makes absolutely no sense whatsoever. So, if you can get a lower interest rate, decrease or equal the amount of time you have left on your current mortgage, and you know that you are going to stay in that house long enough, so those savings allow you to recoup the closing costs, go ahead and do so. A lot of you, I don't think you understand, really, what it costs to refinance your home. There are costs to do so, and I think a lot of you don't understand that when you refinance or when you get a mortgage to begin with. When you buy a home, there usually are closing costs that are anywhere from 2 to 6% of the amount of money that you are borrowing. So, let's just say you are going to take out a loan, whether it's a refinance, or a mortgage for $250,000 it easily, easily could cost you 5000 to $7500 in closing costs just for you to refinance or buy that home. The question becomes, where are you going to get those closing costs from. Now, when you buy a home, you have to come up with those closing costs upfront. When you refinance a home, a lot of times they say, want us to roll those closing costs into your new mortgage. So, you have to really think about, does it make sense to do that or not? So, if you just stick with me here for a second, I just want to do a Suze school on the cost to refinance and what that looks like for you. And if you should roll your closing costs into the mortgage or not. So, let's just say that you have a $250,000 mortgage and your closing costs are going to be about $7500. And you're maybe thinking, how is that possible, Suze, how can my closing costs be so high? Well, you know a lot of times when you apply for a mortgage, many lenders will charge you an application fee of about $500, number one. If you have a mortgage company, that's charging you an application fee, that would be a mortgage company that I would not do business with, because that is not required. They're just getting you, and that absolutely can be avoided. But there are certain fees that cannot be avoided, such as your appraisal fee, and your appraisal fee is how much is your current home that you want to refinance or buy, for that matter, what is it really worth not? What is the seller asking for it? Because maybe they're asking too much for it. What is it really worth? And those fees can go anywhere from 500 to $750. If you're in a rural area, they can even be as high as $1000. Next, you have the origination fees, the cost that the mortgage company is actually going to charge you in most cases for your loan, and those can go from 1 to 1.5%. So, for instance, on a 250,000 mortgage that could be $3750. Next, sometimes you can pay points. I know a lot of you ask me, Suze should I pay points on my mortgage to lower the interest rate? No, you should not. They're just too expensive. There another way for the bank, really to make money because chances are you may not keep your house for more than seven years or whatever. Just don't do it. But you do have fees for title insurance and searches. You want to know, are there any leans against the house? Can this house really be taken in just your name? And that could be anywhere from 5 to $800? Let's go back for one second here, 3750 for just the origination fees than 500 to $800 approximately for the appraisal. Then you have the title insurance. So, do you understand how you're already at almost $5000 or so? Then you have an inspection fee. Is the house in good order? Does it have leaks? Is the plumbing doesn't need a new roof that's going to cost you a few $100 and then you have recording fees for all the paperwork and everything done. So very easily, it can be between 2 to 6% of your loan amount. The question becomes Anna, let's just say a $250,000 mortgage. Should you roll this $7500 into the mortgage so that it would be 257,500? Or should you pay that $7500 up front? Which one should you do? Most likely, very few of you have that $7500 or that $5000 whatever it may be, you don't really have that money when you're refinancing, because normally you refinance because you need to save 100 or $200 or so a month, so you don't have that extra $7500. So, you just normally say I'm going to roll it into the mortgage. In this particular case, if you rolled $7500 into your refinanced mortgage, it would just cost you $32 more per month, that is all. Now I say that's all. But the truth is, if you pay that over a 30-year period of time, that's going to turn into $11,520. That's what it's really going to be over those 30 years. But if that's what it costs you to save money, possibly shorten the term of your mortgage, I would absolutely go ahead and do it now. A lot of you also say, But, Suze, I've been offered a no cost refinance. No, you haven't. If you're refinancing in most cases, your current loan and, there are no cost to do so you're paying for it in a higher interest rate. So, if you're getting a no cost mortgage before you do so, just ask your mortgage broker, or you should be shopping around for this. If you were to pay costs upfront, the closing costs, what would the interest rate be versus a no cost mortgage? Can you just check that out? That's what I wanted you to know about refinancing. Next, I want to talk to you about the stock market, my comments in the past again, a little bit more about Bitcoin just so we can be clear on everything. I still think and we're almost at the end of March now that we are going to see a stock market that goes up that goes down. One sector goes up, one sector goes down and I'm sure all of you are so confused right now. You do not have a clue as to what you should do. I also believe that around March 26. So that's coming up here. You know, in just a few days, we could seriously see right about then these markets seriously skyrocket up because a lot of people have gotten their stimulus checks and a lot of people are going to put their money into the market, believe it or not, with the stimulus checks, even though I have a whole opinion on that. But all right, that's not what this show is all about. After that, however, I do think starting around April 5th that we will start to see these markets trend down for a while, possibly a year or two. I just think that, I don't know if that's going to be right or wrong, but I do not think that we're going to have a depression. I do not think that everything is going to collapse. I do not think that on April 5th everything's going to go down the drain. I think we may start to see things trending down, not everything but some things what don't I think will trend down. I think given everything that's happening with covid and people now having their vaccines and they want to get out and they're not worrying, they're just going for it. Everybody, everybody wants to travel. Everybody wants to get out and I can't blame them. I think you're going to see oil continue to go up. Now, I know that oil has already gone up considerably from where it was when we first started to talk about it last year, when it was almost at a negative $30. And here we are in the 70s already. I think it's going to continue to go up now. How does that affect other things? When oil goes up, transportation becomes more expensive. So, there are certain things and certain products that will become more expensive, simply because it will be more expensive to get it to all of us, so certain stocks will be affected. Other stocks will not. One of my favorite stocks I have to tell you to take advantage of this is Chevron. You know, Chevron currently is paying a 4.99% yield. Now I can talk about these stocks because I don't own them. And I refuse to talk about stocks that I own on the Women and Money podcast, just not going to do it. But there are stocks that I really think are great stocks, and if I wasn't talking about it, I would probably buy Chevron. Honest to God. Now, I just think Chevron is a company that's a really solid dividend payer. I like them in terms of their dividend. I know I'm going to get emails saying, But Suze, they're an oil company, why are you having people spend money on that and do that? Why can't you recommend something else? I'm just telling you what I think is happening out there and where I think some money can be made because so many of you now and I'm so proud that the women and money podcast has a seriously large what I call elderly audience, which includes me, women and men who are in their sixties, seventies, eighties and nineties. And all of us are looking for income and the one very sad part about low interest rates at zero at half a percent wherever you can't get income on your money enough to live on. So, what are you going to do with it? It's very difficult to want to put it in bonds right now. You know, if you look at certain bonds and what happened last year with bond funds and everything, go look at their returns versus the returns of the stock market. So, I just want to talk a little bit about If you need income and you need it to live on, then maybe you want to look for a portion of your money to go into high yielding dividend pain stocks. Now when I say high yielding, I don't necessarily mean 10%, 8%, you have stocks such as ATT a stock, that's a really great company currently paying a 6.93% dividend yield. And I personally think that dividend yield is safe. You also have companies like IBM at a 5% dividend yield. You have the XLE, which is the ETF for the oils paying you 4.5%. I will tell you. When we first started talking about it, it was like at a 10, 11, 12% dividend yield and if you bought in way back then, that's how much you would be making on your dividends. Plus, it's almost doubled. So, these are things that you might want to consider. Now, maybe you don't want to buy individual stocks. I get that because the truth is, if you're going to do so, you need to have enough stocks where you can diversify your investments. So that's about 20 stocks because you don't really want more than four or 5% of your holdings in one stock. So, you need diversification. Another way that you could get diversification and get a pretty good yield, would be to simply by the pro shares Standard and Poor's dividend aristocrats. Now the symbol of this ETF is NOBL. And this ETF is made up of stocks that have consistently increased their dividends for the past 25 years. That is a big deal, and they are paying right now approximately 2% which is a lot higher than you're going to get anywhere else and possibly get growth as well. So, these are just a few of the ideas that you might want to look into if you are needing income. Again, I would just be careful here about getting into and locking in an interest rate for a really long period of time. I would not be doing that. I would not be buying a 30-year Treasury bond. I wouldn't be going into long term bond funds because I do think we're going to have to see what happens with interest rates here in terms of the 10-year Treasury and things like that. But I don't know. I just think if you waited a little, you will be happy that you did. So, we talked about the stock market. We talked about dividend paying stocks. We talked about just, you know what I really think is going to be happening. We talked about the dates that are important. And now let's just talk a little bit more about Bitcoin. I still believe with every part of my soul that Bitcoin will be in our future for years to come. I'm just going to repeat, does that mean that I think you should go and put all your money in it right now at approximately $60,000 a Bitcoin? I don't, but I do think via PayPal, which is how I do it. It would not be horrific if you wanted $200 here once a month, $100. But if you watch Bitcoin carefully, it can fluctuate $10,000 or more in a day. Bitcoin is very volatile. It has a volatility rate of about 80 to 100% a year, which means it can fluctuate from 60,000, you know, all the way down to 20,000, 10,000, go right back up again. So, you have to be prepared for that ride. But if you listened to my February 7th, I know, KT said, and I may have repeated it. The January 31st podcast for a lesson on Bitcoin. It's the February 7th podcast, and I really give my reasons as to why. I also think, if you want to play Bitcoin, the Stock Square would be a fine way to play it as well. But I do think with this stock market, dollar cost averaging is the way to go. Alright, so I hope you've learned something today and that you've gotten something out of this podcast. But I just want to leave with one more note. And this note is to a personal friend of mine by the name of Jennifer Littlehails, who was Peter Roths, right hand, left hand, both legs. assistant at Warner Brothers for years and years, Peter recently retired, and last Friday was Jennifer's last day at Warner Brothers. And believe me when I say that she is the brains behind many of the things that Warner Brothers have produced over these years, she is the brain. Jennifer, I have never in my life met a woman like you. I have never in my life been in such awe of how much you care about people, how you write, how you think, how you act and how you feel and just who you are. So, I just want you to know both KT and I love you so very, very much. And for us, you are one of the most precious treasures we have in our life. We wish you the best, and I just can't wait to see what the future holds for you and Peter as well. All right, everybody, until Thursday. There's only one thing that I want you to remember when it comes to your money. And it is this people first, then money, then things. Now you stay safe. Bye bye.
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