Tag Archives: Mortgage

Mortgage Rates, Possible Technique for New Mortgages

With the FOMC (Federal Open Market Committee) winding down their monthly purchases of US Treasury and Mortgage Backed Securities (Pools of Actual Mortgages) it is not surprising to see Mortgage rates, specifically the 30 year rate move up, FOR NOW!

Key Technique for New Mortgages

Knowing you may not read the entire article… we are all busy, so completely understand, the meat of the following information is think twice before trying to “buy down” your mortgage rate. Yes, they (rates) have gone up and yes it is more than just a few quarters ago, but it is entirely likely that the next economic slowdown will welcome in lower rates. If you pay a lot of money to lower your rate now … your hurdle to refinance in the future is much greater!

Mortgage Rates Review

While we may think recent rates are sky high… let’s take a longer term view.

Source: Freddie Mac, 30-Year Fixed Rate Mortgage Average in the United States [MORTGAGE30US], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MORTGAGE30US, February 22, 2022.

The Short Term View looks much different

Source: Freddie Mac, 30-Year Fixed Rate Mortgage Average in the United States [MORTGAGE30US], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MORTGAGE30US, February 22, 2022.

Between FOMC lowering their monthly artificial purchases, interest rate markets front running the FOMC and a slight reversion to the mean … rates are higher than recently… but think twice before “buying down” that rate!

Have a Great “Mortgage Rate Analysis” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.



Back to Basics Fun Educational Review – Part Three – Debt and Debt Planning, The Good The Bad and The Ugly

Welcome to Part Three of our fun educational “Back to Basics” series original started here with Part One “The Emergency Fund” and continuing with Part Two, Protection Planning, and now on to Debt and Debt Planning!

The goal of this series is to cover the most important Foundational Financial Planning items in not only order of importance but also order of technical difficulty. Once complete we expect to have a foundational, almost college like course of Financial Planning topics and goals that can be shared all at once in Netflix series drop like format for any that may be in need or interested. Longtime clients will most certainly find a repetition of items we have spoken or written about before but may occasionally uncover a topic that needs addressing due to a change in our situation.

Debt and Debt Planning – The Good the Bad and the Ugly

Debt and Debt Planning is an extremely important topic, ESPECIALLY in today’s buy now and pay later constantly pushed promotional items. But be careful, nothing is for free and one misstep could lead to an unneeded compound interest tragedy….

In a perfect world, no debt of any type may be a desire and many might feel success is reached upon this achievement, but not all debt is bad, and there are likely mandatory times of debt!

Once again, adhering to Part 1, and having a healthy Emergency fund allows control of ones own destiny giving full control of this topic… so let’s jump in!

The Good Debt

Student Debt May Be The Best Debt Someone Can Have

An investment in ones self in the form of higher education … while we can discuss the merits on how enrollment costs have increased rapidly, is generally a very helpful item for the long term and again generally, if career pointed will frequently pay off in the long term.

  • Reflect on what you are incurring the student debt for with watchful eye for help upon completion i.e. Might not be a good idea to incur debt for something you may never use career wise in the future
  • Keep an eye on the total expected amount of debt you may be saddled with upon completion and mind possible less expensive options
  • Watch the terms of the debt, deferred interest, government subsidized, zero interest, low interest
  • Of course try to keep it at a minimal

Residential Mortgage Debt

With long term Mortgage rates (30 year) recently in the 2% -3% range we can argue that Mortgage debt is not bad debt. Cautiously we put Mortgage Debt here in the good, but there is an interest rate that would make it bad debt i.e. An exaggerated example from decades ago of 10%+ would not be good debt.

Tax Benefits of Mortgage Debt can help make the headline rate even lower after tax benefits. But those can come and go as tax laws change.

Most can qualify for WAY WAY more than one should actually have! Our conservative view equation is generally a mortgage of twice annual earnings is a really good place to start, especially for those early in their careers.

Free/Zero Interest Debt is Ok if Handled Properly

Again pointing to our healthy Emergency Fund, Interest Free/Zero debt CAN be ok. Do not take it as an excuse to make an unaffordable purchase!

Watch the terms, as one mistake often carries a huge carry forward of interest, far negating the extra interest one would earn by using the “Free” debt.

Also be careful with a large lump sum payment at the end of a “Free” term… make darn sure we have the funds available and it will not damage our Emergency Funds stash!

The Bad Debt

Interest bearing debt for an item not needed is Bad Debt and borderline Ugly debt. As mentioned earlier, we live in a highly promotional world of “Buy Now, Pay Later” …. Do not bite.

Examples may include what we call Toys, such as extra motorized or floating vehicles, overly expensive devices or equipment and the like.

It is fine to “Treat” ourselves every once in a while, but don’t do it on Bad Debt and don’t mess up your Emergency fund !

The Ugly Debt

Any high interest debt, especially Credit Card type debt.

With interest rates very low on savings rates, having a debt interest rate over mid single digits would be called Bad Debt!

Most of the time this debt occurs is usually attributed to our Part 1 Emergency Fund inadequacy … possibly combined with a “life’s curve ball” unexpected event.

Rates as high as 20% are not common in this swimming pool… please don’t swim here and keeping that emergency fund healthy will keep you out of the water!

Now that we have a good foundation…. next up, Retirement Planning!

Have a Great “Debt Planning” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.



September 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our September 2019 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast format as well as Video!


November 14th from 6:30 to 9 PM – Perot Museum – For the Evening

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

September – 2019 Video

Financial Planning Tip (s) –

RMD Season is here – Is your DOB between 7-1-48 to 6-30-49 ?

In this post, we reminded all of those with the unique option of deferring that first RMD an extra year on the perils of the double income from that deferral decision…..

Defer at your own risk and make sure you will not jump a tax bracket by doing so!

Mortgage Rate Update – Time to Refinance?

Mortgage rates (the drop there of – in rates) caught our attention and in this post, we reminded of eleven (just counted them – was surprised so many) items to think of when/if you should refinance – its a big decision and there are many variables,  if you didn’t catch the post and have been in your loan for a few years, be sure to take a look … another reminder will also make its way to you in the Q 4 2019 Newsletter –

30 Year US Avg Mortgage Rate


Capital Market Comments –

Inverted Yield Curve Update

In this post, early in the month we reviewed the definitely inverted yield curve…. and spoke to this being one of the slowest recoveries on record…. just after our post, the yield curve did normalize on positive trade talks…. Look for more details in the coming Q 4 2019 Newsletter-

9-3-19 three month less 10 year fred graph

FED Lowers Again, but only by .25%

Jerome Powell Chief of the FOMC (Federal Open Market Committee) lowered rates by .25% to the 1.75 to 2.00% range, which will directly effect our overnight money, such as checking accounts and money markets…

Their fear is the prior mentioned Tariff saber rattling causing an extended slowdown….

We prefer they save that gunpowder for a real fire, but just pouring a small bit of gasoline on the coals is ok for now!

FOMC Rate now

Have a Great Day – Talk to you at the end of October!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Lower Rates MAY Have Created an Opportunity … Refinance that Mortgage? – Here’s Some Tips

As mentioned Friday, with an inverted yield curve, mostly caused by longer term rates being lower than short, an opportunity MAY have been created….

We are going to put this in the Newsletter with more details, so please do not take this as an “ok” to run out and start refinancing, there likely is no hurry AND its a big decision…..

Mortgage Rates are Low Again

This chart is the Average 30 year rate across the US –

30 Year US Avg Mortgage Rate

Here are a few points and rules we like to think about when considering a refinance:

  • Think 18 months cost break even – We like to have the saving from the refinance cover the cost of the refinance within 18 months – i.e. Person with $30k mortgage at 5% probably would not need to refinance to 4%, but a $3 million mortgage may be smart to refinance from 4.25% to 4% or the like, if the numbers work out.
  • Resetting Term – Remember if you reset your term, you are extending the treadmill – You may consider paying extra after the refinance to keep on prior term if desired.
  • Planning on staying – It makes no sense what so ever to refinance if you are planning on moving in the next couple of years – life’s curve balls always happen, but if you are planning to move, likely pass on the refinance.
  • 30 Year Fixed Mortgage is our favorite as you can accelerate your term by paying extra, but a 15 year had its merits too, especially if the rate is greatly different – we are not big fans of Variable rate loans.
  • Closing Costs- keep low as possible- This will make your payback faster, easier and also give you the opportunity to refinance again in the future without angst.
  • Buying down points to lower rates – We are not fans of buying down the rate – Ultimately this increases your closing costs and extends the break even analysis from above – If you did on the last mortgage, review where you are and make sure you are out of your break even period before refinancing again.
  • Ancillary fees – It’s a complicated transaction and there are costs associated with it, deservingly so, but try to keep costs down so as to once again keep your break even period short.
  • PMI – Private Mortgage Insurance – Stay away from this if at all possible. This insurance is a cost to you and does nothing for you as the owner/loan holder.
  • Deductibility of cost – Some costs may be deductible, consider costs that are deductible for taxes over costs that are not – With changing tax laws, expect confusion on this point.
  • Avoid teasers – If you google mortgage rates you will get some outlandish offers, if it sounds too good to be true, it is, there is always a catch. Don’t bite on something that is way different than the others.
  • Careful with Hard Credit Reports – Once you lock in on a decision, avoid running multiple Hard/thorough credit reports (these are needed for mortgages) as duplicate checks will lower your credit score.

Have a Great “Possible Refinance Mortgage” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Why we like 30 year mortgages over shorter terms!

The American Dream of owning a home …

It comes with a Liability in most cases …

With lots of term options, we wanted to discuss our favorite, and why!

The 30 Year Mortgage – Our Favoritedebt-1500774__480

When most purchase a home, especially the first home, a Mortgage is the norm. In most cases the 30 year mortgage will be the most costly from a rate only standpoint –

Here is why it is our favorite:

  1. You can easily make a 30 year mortgage a shorter term by paying it faster/extra.
  2. You cannot pay less on a scheduled shorter term loan if life’s curve ball comes around.
  3. While likely the higher rate, the monthly cost will be the lowest due to the extended term.

There are always exceptions to the situation, but for the above reasons, our starting place is usually the 30 year mortgage!

Have a Great “Understanding Mortgages” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.