Recently, mortgage rates saw their largest drop in three months. While rate fluctuations are common, this particular decline presents an opportunity to reassess strategies around home buying, refinancing, and broader financial planning.
Whether you’re exploring options for purchasing a home, considering refinancing, or simply looking to enhance your financial position, here’s how this development may fit into a well-rounded financial plan.
- Understanding Mortgage Rate Fluctuations
Mortgage rates are influenced by a combination of economic factors, including inflation, Federal Reserve policies, and market demand for mortgage-backed securities. The recent drop could reflect shifts in these areas, and while it’s the largest decrease in three months, it is part of a larger trend of volatility. For example, rates reached a two-year low in September, only to rise again soon after.
Historical patterns suggest that mortgage rates may experience periods of fluctuation based on economic conditions. While it is not guaranteed, some of these conditions may include changes in inflation data, Federal Reserve actions, or shifts in investor confidence in the markets.
- Why Mortgage Rates Matter for Financial Planning
Mortgage rates are a central component in managing long-term debt and cash flow. A mortgage often represents one of the largest financial commitments individuals make, and the rate you secure directly impacts your monthly payments and the interest you’ll pay over the life of the loan. This recent rate drop could mean reduced monthly costs, which may offer flexibility in achieving other financial goals.
Potential Benefits of Lower Mortgage Rates
Lower mortgage rates can have several positive implications, particularly for cash flow and debt management. Here’s how they might play a role in your financial strategy:
- Enhanced Cash Flow and Budget Flexibility: Lower mortgage payments can free up cash that you might allocate toward other financial goals, such as retirement savings, college funds, or emergency reserves. Improved cash flow may also provide a buffer for handling unexpected expenses without tapping into high-interest credit.
- Interest Savings Over Time: Lower rates can translate to significant interest savings over the life of a loan. For homeowners planning to stay in their homes long-term, refinancing to secure a lower rate could potentially help reduce overall debt, freeing up funds that can be redirected toward other financial priorities.
- Debt Management and Consolidation: Refinancing at a lower rate might support a broader debt management strategy. By reducing monthly payments or paying off high-interest debt, you could simplify your overall debt structure. However, it’s essential to consider the fees and closing costs associated with refinancing, as these can impact the overall savings.
How to Integrate Mortgage Decisions into Your Financial Plan
Before acting on changes in mortgage rates, it’s essential to assess how they align with your long-term financial objectives. Here are a few steps to consider:
- Clarify Your Long-Term Financial Goals: Reflect on your broader financial objectives. Are you working toward building retirement savings, funding a child’s education, or preparing for a major life change? Any decision to adjust a mortgage should fit within this context, supporting your goals without straining other priorities.
- Evaluate Your Current Cash Flow Needs: For those managing tight budgets, a reduced mortgage payment could provide needed relief and flexibility. Alternatively, if your cash flow is already healthy, the savings from a lower payment might be better directed to other growth-focused financial goals.
- Strengthen Your Emergency Fund: A potential reduction in monthly payments might be an opportunity to build or enhance an emergency fund, which is vital for financial stability. Having a well-funded emergency reserve offers peace of mind and helps to protect other investments and savings during unexpected events.
- Consider Tax-Efficient Investment Options: If you find yourself with additional cash flow from refinancing, it may be beneficial to increase contributions to tax-advantaged accounts such as IRAs, 401(k)s, or HSAs. This can support your wealth-building goals while also providing potential tax benefits.
Planning for Financial Stability and Risk Management
While the recent rate drop may present potential benefits, it’s essential to balance opportunity with caution. Here’s how to ensure that mortgage adjustments support stability within your financial plan:
- Avoid Over-Leveraging: Lower mortgage rates can sometimes make it tempting to consider more expensive properties, but it’s crucial to stay within a budget that aligns with your financial goals and risk tolerance. Purchasing within your means allows for flexibility and prepares you for potential changes in economic conditions.
- Explore Shorter Loan Terms: Refinancing at a lower rate can sometimes allow you to shorten your mortgage term. A shorter loan term can result in paying off your mortgage sooner, potentially reducing total interest paid and freeing up resources earlier to pursue other financial priorities.
- Maintain a Flexible Approach: Building flexibility into your financial plan can be advantageous, especially in uncertain times. A stable financial base with a well-structured mortgage and emergency fund allows you to handle economic shifts with confidence. This flexibility is key to maintaining a stable, adaptable financial strategy over the long term.
Final Thoughts
The recent decline in mortgage rates may offer opportunities to enhance your financial plan, but it’s essential to approach any decisions thoughtfully. When integrated carefully, mortgage decisions can play a supportive role in building a more resilient financial future. By focusing on your unique goals, cash flow needs, and long-term strategies, you can make the most of these rate changes while staying true to your overall financial objectives.
If you have any questions, give us a call. For additional insight, read “Wealth on Purpose” by Bryan Ballentine.
Sources: Located at the bottom of article
Golf Tip of the Week:
The key move every tour player makes, and how you can do it consistently
There’s an ocean of golf instruction devoted to telling you how to move your body to hit it better. And yes, turning, pivoting, shifting—all that stuff is important to playing good golf.
But Golf Digest Best in State Teacher Tom Rezendes says there’s one simple way to cut through the fluff and focus on a single thing that will get you hitting it, yes, more like a tour player.
It starts with learning what your “hub” is, and understanding how to move it. “The hub is the the point where your hands connect to the grip, and the path you move that hub on is essentially a fingerprint of your swing,” says Rezendes, who runs the NorCal Golf Academy in Walnut Creek, Calif. “The hub—your hands—move on a three-dimensional path during the swing, and that path determines how much energy you can transfer into the ball.”
It will come as no surprise that players like Dustin Johnson are much better at transferring energy than you are. Genetics and talent are part of it, but good players are also a lot more efficient with their hand path. You can be, too. “Average players suck it inside and move the hub more shallowly going to the the top, and then go more upright or steep on the way to the ball and even more steep on the exit,” says Rezendes. That means you’re essentially getting in your own way. “Tour players have a path that’s a lot steeper on the way back, and the downswing goes back to the ball below that initial path and the exit is even more below that.”
What does this mean for you? “You need to get the club up more way earlier than you think instead of banking it around you,” says Rezendes. “It may feel ‘right’ or ‘powerful’ to do what you think is ‘winding up,’ but it’s not really doing anything for you. You need 45 degrees of arm lift by the time you have 45 degrees of shoulder turn. Put your bag behind you with the base in line with the ball and it will force you to take the club up more. Even if you can’t swing as fast as somebody like Dustin Johnson, you’re still going to get way more out of what you can do.”
Golf Tip adapted from golfdigest.com i
Recipe Tip of the Week:
Leftover Cranberry and Cherry Cobbler Pie
Ingredients
1 1/2 cups canned cherry pie filling
1 1/2 cups leftover cranberry sauce
1 1/3 cups all-purpose flour
1 heaping tablespoon granulated sugar
3 teaspoons baking powder
Pinch kosher salt
6 tablespoons cold salted butter, cubed
3/4 cup buttermilk
Directions
- Preheat the oven to 375 degrees F.
- Mix together the cherry pie filling and cranberry sauce in a bowl. Transfer to a 9-inch pie plate.
- Mix together the flour, granulated sugar, baking powder and salt in a bowl. Cut in the butter until it resembles tiny pebbles, about 1 1/2 minutes. Mix in the buttermilk until it just comes together (it will be lumpy).
- Dollop 6 to 8 mounds of roughly 2 1/2-inch dough balls around the outside of the pie plate. Sprinkle the coarse sugar over the top.
- Bake until the biscuits are golden, 30 to 35 minutes. Cool for 10 minutes before serving.
Recipe Tip adapted from foodnetwork.com ii
Travel Tip of the Week:
This Travel Checklist Will Help You Prepare for Your Next Trip Like a Pro
You’ve picked your destination, you’ve booked a hotel, and your plane tickets are in hand. Now all that’s left to do is pack. But what exactly do you need to bring along on your adventure? Here’s an easy-to-follow travel checklist to help you prepare for your next vacation, starting with packing tips.
Packing Tips
- Think about the weather: Check the weather in your destination in the days leading up to your trip to help determine your packing strategy.
- Check if your accommodation offers laundry: Staying in a vacation rental? See if the home has a washer and dryer. In a hotel? Inquire about laundry services. This could help you cut down on what you need so you can pack half as much and wash throughout your trip.
- Pack in a single color palette: To cut down on your luggage, try packing all your clothes in a single color palette so everything can easily mix and match.
- Edit before you go: Lay out what you want to pack, then walk away for at least a few hours. Go back and ask yourself, “do I really need this?” about every item.
What to Pack in Checked Luggage
- Toiletries: No matter how long you’re gone, odds are you’ll need a few toiletries. In your toiletry bag, don’t forget to pack a toothbrush, toothpaste, face and body soap, deodorant, shampoo and conditioner, a hairbrush, sunscreen, and any makeup you may want. Don’t forget hair styling tools and products if you use those too.
- First aid and medications: Take prescription medications and any over-the-counter medicines you may need. If you have space, bring along a small bag of first-aid items too, including a few band-aids, hand sanitizer, pain relievers, tweezers, and alcohol wipes.
- Footwear: Before you travel, think about every situation you’ll be in during your trip. This will help you determine your footwear needs. Walking around a city? Pack comfortable sneakers. Heading out on the town? Bring dress shoes. Hiking? Sturdy boots for sure. But only bring what you need, as shoes can take up a ton of valuable space.
- Socks: Bring a pair for every day of your travels. Roll or fold them and place them into your packed shoes to save space.
- Underwear: Try to avoid the temptation to bring too many “just in case” underwear. Pack one pair for every day you’re gone.
- Pants: Again, situation awareness is key. Going somewhere warm? Bring a loose pair of slacks. Cold? Jeans are a great option. Aim to bring one or two pairs of travel pants that will match several tops.
- Shorts: If you’re going somewhere warm (lucky you!) make sure to bring at least one pair of shorts so you don’t overheat.
- Dresses or slacks: If you have a nice dinner or an evening out planned, make sure to pack one fancier item to feel your best. Try packing it in its own garment bag to keep it fresh, or think about bringing a portable steamer to ensure it’s in peak condition when you arrive.
- T-shirts: For warm-weather getaways, t-shirts are king. Bring two or three depending on your vacation length (and don’t worry about being an outfit repeater).
- Cold-weather clothes: For colder vacations, make sure to bring warm clothes, including long-sleeve tops, sweaters, or sweatshirts. Wear your jacket, gloves, hat, and scarf on the plane to save valuable luggage space.
- Sleepwear: Don’t forget your jammies. A single pair (or two) should suffice.
- Swimwear: If your vacation involves a pool, hot tub, or the ocean, don’t forget swimwear and a coverup.
- Jewelry: Bring along any jewelry you feel you want to pair with your outfits. Not comfortable packing your real engagement or wedding ring? Try swapping it for a cheaper fake that you won’t be afraid to lose.
What to Pack in Carry-on Luggage
- Electronics: Your carry-on bag should include anything you need or want while on a flight. This can include your laptop for work if you’re headed on a business trip, a cell phone to stay connected, or an e-reader. Just don’t forget to pack the appropriate chargers.
- Emergency medications: Bring at least two days of your medications with you to ensure you have access to anything you need should your checked baggage get lost.
- Travel documents and identification: Have your ticket information handy (including on your cell phone and a printed copy just in case), along with directions to your accommodation upon landing and any pertinent visa information. Also, bring your passport and another ID for international trips, and a credit card plus a little cash for emergencies.
- Face mask: Face masks may no longer be mandatory on many airlines, but it’s never a bad idea to have one handy just in case you want to add a layer of protection or if it’s required at your destination.
- Sunglasses or reading glasses: Bring your sunglasses and any other eyewear you need to see (including an extra pair of contacts in a to-go case).
What to Do Before You Leave for a Trip
- Alert your credit card or bank: Most credit card and banking institutions allow you to change your status to “traveling” in their app or on their websites. But if you need to, contact them via phone so they don’t accidentally shut off your access while traveling.
- Check your cell phone plan, too: Make sure you’re set up for travel on your mobile plan without paying hefty roaming fees.
- Confirm your reservations: Double-check check all your reservations are secure to avoid any on-arrival snafus.
- Take out the trash and give your home a once-over: Take out the trash — including any leftovers in the fridge — and give your home at least a little wipe down and a vacuum. That way, you come home to a fresh space.
- Set up your security, or tell a trusted neighbor you’re leaving: Set up your security company’s alerts, and if you don’t have one, at least share your plans with a trusted neighbor so they know to keep an eye out for anything fishy. Bonus if they can pick up your mail, too.
- Put your mail on hold: Going for a while? Ask your mail carrier to pause service so things don’t pile up in your absence.
- Lock the door and shut the garage: We don’t want a “Home Alone” situation, do we? Also, if your car is parked outside, consider putting on a car cover to protect it from the elements.
Travel Tip adapted from travelandleisure.com iii
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Our mailing address is:
Ballentine Capital Advisors
15 Halton Green Way
Greenville, SC 29607
Sources:
- The Brookings Institution: Impacts of Tax Policy
- Federal Reserve Economic Data
- U.S. Bureau of Economic Analysis
- Morningstar: Sector Performance During Elections
- National Bureau of Economic Research: Economic Policy Changes
Disclosure:
Ballentine Capital Advisors is a registered investment adviser. The advisory services of Ballentine Capital Advisors are not made available in any jurisdiction in which Ballentine Capital Advisors is not registered or is otherwise exempt from registration.
Please review Ballentine Capital Advisors Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.
This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.
No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.
Advisory services through Ballentine Capital Advisors, Inc.
iihttps://www.foodnetwork.com/recipes/ree-drummond/leftover-cranberry-and-cherry-cobbler-pie-9503259
iiihttps://www.travelandleisure.com/travel-checklist-6834969
