In this article, I will focus on the Finance aspect of the 1DesignerLife Framework.
I have been investing in the stocks market since the first day of my career as an Electrical Engineer.
You may concluded that I had an exceptional up bringing such that it was natural for me to save money and take advantage of the compounded return (please read: Money – Self-Made By Designed).
During the subprime mortgage crisis from 2007 to 2008, I learned an invaluable financial lesson that for the rest of my life – the lesson will forever shape and guide my action and behavior with regard to finance.
There was a $5 billion financially play executed at Bank of America. The stakes are now value at approximately $19 billion in 8 years.
This perfect play by Warren Buffet is the reason why he is a legend in the world of finance.
As a gladiator in the financial arena, Warren has the CATCH – he is a voracious consumer of financial knowledge. He is frugal with money and he is trained to have endless patience.
A much smaller, down to earth and successful entrepreneur is Sam at FinancialSamurai.com.
I just read an article on Financial Samurai that meticulously detailed the process of refinancing a home at no cost – https://www.financialsamurai.com/all-the-mortgage-refinance-fees-in-a-no-cost-refinance/.
Below is my review of the article and applied the CATCH!
Common Mortgage Refinance Fees
Knowledge – you need to read this in detailed and gain the necessary knowledge before you engage in the next refinance or any type of loan in general. Most loans are structured with the core frame and the details are filled with specificity.
In the “Lots Of Mortgage Refinance Fees!” section, The most important read is – “The only fees that could possibly be reduced or eliminated are the Rate Lock Extension fee, the mobile signing fee, and the appraisal fee.”
Sam toiled in the trench and pointed out very specific 3 items. If you still pay for them in next closing cost – you have not gained the knowledge.
The only thing you may have to take into consideration is brushing up your “ass kissing skill” or “social engineering skill”. Unless you are refinancing with a jumbo loan of $700,711 – you may not have the same financial leverage.
These 3 specific items are 100% belonged to the loan officer responsibility and decision making – if he/she is happy the deal is sealed.
Money – the loan industry as a whole is regulated by laws. Many of those fees can be traced back to a governmental regulation – these regulations are to minimize loan sharks.
Although each of the fee is regulated by law, the banker can set the fee at any amount as long as they can justified the “loan shark” level fee with the actual operating expenses.
Therefore, all fees from all bankers will not be exactly the same. For example, I would be a total surprise for me if all processing fee as listed in Sam’s article is $1350 for all bankers.
Everything in the financial world is negotiable with leverage regardless regulation or not – money is the most effective tool.
If you don’t plan to come with the “$700,711” as a loan, don’t be disappointed if you are unable to score a “No Cost Closing Cost” as demonstrated in this article – however, you must be willing to push for the reduction or elimination of the 3 fees mentioned above.
Patience – he took almost ½ year to evaluate and tease the lenders before committed with Well Fargo. Patience is one of an essential virtual in success – unfortunately, many of you are lacked in comparison with your peers who are more successful than you.
Avoid Big Financial Moves During The Refinance Period
Knowledge – this is fundamental characteristics in the world of lending. If you don’t like to read and chant them in your head, write them down and file the list somewhere for the ease of retrieval on a preparation of a next loan.
As the world is moving toward AI, information and decision making are no slowly and sure placed into an algorithm and not a person.
Soon, the cost of refinance will be fluctuated to the last second of the transaction between you and the banker – having a stable and sensible financial behavior will minimize the cost.
Take Advantage Of Lower Interest Rates
Knowledge – “I recommend refinancing if you can save at least 0.25% on interest and break even within 12-18 months. If you go the no-cost refinance route like I did, then your breakeven is immediate, even if the interest rate is slightly higher.”
The 0.25% math and the “no-cost refinance route” are fully vetted by the Financial Samurai. It should be good for 2020 unless there is a movement from the treasury – in which case, goes back to https://www.financialsamurai.com/ for the updated information.
Overall – I would give the article 7 stars out of 10 for the education since it is lacked of utility for the mass in actual execution.
Financially, when you are at the bottom and looking up, everything appeared structured and set in stone.
For example, all the fees listed in any loan documents are officially structured and gave the impression they are non-negotiable – they appeared so to you because you felt small in comparison the banker.
Unfortunately, if you want to carve out a small piece of life for yourself and your family, from time to time you have to be able stand toe to toe with competitors who are seemingly bigger and stronger than you – just as you have witnessed Sam at FS sparred with Well Fargo for a good deal.
It is very possible that you will have a long losing streak in many financial negotiations – that does not change the fact that everything in the financial world is negotiable.
In order to avoid the doing the insanity – doing the same thing and expecting a different result, you must constantly evaluate which of the 3 requirements you are lacking – knowledge and/or money and/or patience and time.
Knowledge, money and patience/time are the basis for all successful negotiations.
Let’s play the game of life!
You should link to the FS article.
Thanks…technical glitch!