Going to the Fountain of Youth

A recent New York Times article (“Attracting Young, Diverse Mortgage Bankers – Aug. 21, 2015) details the efforts of a company called Radius Financial Group to reach out to and cultivate younger candidates to become Loan Originators, among other things. Keith Polaski, COO and a founder of Radius, describes the mortgage banking demographic as “55-plus-year-old white guys and gals,” and states, “If we don’t do something about creating the next generation of mortgage bankers, we’re going to old ourselves right out of business.” It’s a logical connection that younger homebuyers are going to gravitate toward a younger demographic of both mortgage bankers and real estate agents.

Dave Stevens of the Mortgage Bankers Association echoes this sentiment and has approached realtors to establish training programs for younger professionals. The mentality behind this, of course, is to create a dynamic that presents a younger “face” to the up-and-coming homebuyers. And that’s where the training is crucial: while it’s nice to have the young “face”, it’s absolutely vital that knowledge and expertise are a part of the overall package.

With that said, the 40-plus-year old buyers should not be discarded – there are a lot more of them than those who are under 40 – but it’s clear that the market for the younger buyers is only going to grow. Business as usual is not going to attract these younger buyers – let’s be sure not to “old ourselves right out of business.”

Bi-Weekly Mortgage Payments Doubling Your Pain?
It’s a classic means of paying down your mortgage faster: take your monthly mortgage payment (PITI), cut it in half, and make that half payment every two weeks. By the end of the year, you will have made 26 of these payments for a total of 13 full payments. Nothing wrong with wanting to pay off your mortgage early!

Recently, however, a payment processing company called Paymap was fined $5 million by the CFPB for defrauding their customers. In addition to making completely unsupported claims of how much a consumer will save though this bi-weekly payment program, they were telling their customers that the mortgage payoff schedule was “every two weeks” – in reality, Paymap was withdrawing the payment amount every two weeks from their customers’ accounts, but they were waiting until the first of the next month to transfer the funds to the mortgage servicer. The payment schedule did not change.

Two recommendations to avoid such a debacle:

Pay an extra “twelfth” in your monthly mortgage payment. For example, if your mortgage is $1200, add another $100 to your payment for a total of $1300. At the end of the year, you will have made the equivalent of 13 monthly payments. No muss, no fuss.

Or, give your mortgage a “raise”. If you receive a raise of 5% at work, add 5% to your mortgage payment. By tacking on a “raise” of $50 to $75 each month, you’ll significantly reduce the number of years on a 30-year mortgage.

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