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mortgage: Reason #10--Mortgages give you greater liquidity and flexibility. - 03/05/10 01:58 PM
(I just realized that my 10 part series had only 9 parts! Sorry for the delay in getting out Reason #10)
You may have heard this one before, but let's take a look at the tale of two brothers. Both brothers are exactly the same age at 25, both make the same amount of income at $75,000 per year, both have $40,000 in savings, and both want to buy a house for $200,000. Let's assume for the sake of an easy example that both have no other debts besides their mortgages.
The first brother decides that he wants to put … (0 comments)
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mortgage: Reason #9--Long term mortgages = more wealth creation - 01/28/09 11:17 AM
Ask yourself the following question: "Do I want to pay off debt or do I want to build wealth?"
I know, I know...there's A LOT of fluff out there in the world today about paying off your debt to become wealthy. We've covered several ideas in the "Top 10 reason's to use your mortgage to create wealth" series, but there are still two more. Some of the leading, self proclaimed, financial guru's will tell you that paying off all of your debt is the only way to be truly happy.
Understand one important point: Being debt free does not necessarily mean you are … (0 comments)
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mortgage: Ohhh Baby...I hope your ready! - 12/16/08 04:21 PM
As predicted, the Fed cut the federal funds rate today. That's the interest rate that banks charge each other. The mortgage market seems to be following suit as I've already received several "reprice for the better" statements from our various lenders.
What does this means for you as a Realtor, or financial planner, or CPA, or anyone else for that matter? It means be PROACTIVE and go through your database of past clients. Be the source of information for them and have them get in contact with their lenders immediately! If the value of the homes are still there and the clients still … (6 comments)
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mortgage: The BIGGEST misconception in real estate lending. - 12/16/08 02:19 PM
I always here this a couple of times per year, "We have $500,000 worth of equity in our home, but we only make $50,000 per year. We want to take out $400,000 worth of equity in a cash out refinance. Can you help us out?"(The numbers obviously vary, but for the sake of argument, they are somewhat exagerated in this example)
Nope! I sure can't. The biggest misconception in real estate lending is that you are not borrowing money using your house as collateral, you are borrowing money against your income. More specifically, you are borrowing money against your ability to … (1 comments)
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mortgage: Reason #6--Your income grows over time...your mortgage doesn't! - 12/10/08 12:45 PM
Another benefit of using your mortgage to create wealth is that it should (theoretically, I suppose) get easier over time to make the payments. Why? For the average American, ones gross yearly income typically increase over time. (Obviously, there are exceptions to the rule).
It can even get fun! I hear stories about how my father was barely able to afford his first house and it cost him a grand total of $50,000. He had mortgage payments of about $350 dollars per month and they way he tells me, "his parents thought this was absurd".
"How in the world could he afford this … (2 comments)
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mortgage: Reason #5--Mortgages are Tax Favorable - 12/08/08 12:57 PM
Not only are mortgages tax deductible (check out my previous post, Reason #4--Mortgages interest is tax deductible), they are also tax favorable. What does this mean for you?
Consider two scenarios. You have a mortgage that costs 6% in interest and you have also earned 6% on your invests over the course of one year. The mortgage interest is deductible at all levels of income tax brackets. The money you have earned in interest on your investments is taxed as low as 15% (depends on several factors).
So, your mortgage will actually only cost you 4.5% after taxes, while your investments will net you a 5.1% … (2 comments)
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mortgage: Question of the Day!!! - 12/05/08 11:12 PM
I had a friend that I hadn't seen in a while run into me at the supermarket in our neighborhood. We proceeded to talk a little bit about what each other's been doing since the last time we talked.
And then it happened....
"Are the banks lending money again?" he asked.
As a mortgage planner, I was thinking, "Holy crap. Is he serious?" As it turns out, he really was.
So why is this such an unbelievable question from someone in my line of work? Becasue perception is reality people. If they media says so, it must be true, right?
Wrong!
… (7 comments)
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mortgage: Reason #3--Mortgages are relatively cheap money - 12/01/08 10:19 AM
Let's compare two different types of loans: mortgages and/or credit cards. Interest rates on mortgages are currently in the 4-10% range where as interest rates on credit cards are in the 8-30% range with the average somewhere around 15%. Why is this so?
When you borrow money for a mortgage, you use your home as collateral. If you fail to repay your mortgage debt, the bank can (and will) recoup their money by repossing their property. This is called foreclosure. Contrast that scenario with a credit card. If you buy a nice Armani sweater with your credit card and you fail … (0 comments)
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Jeff Trevarthen
Campbell,
CA
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Accessbanc Mortgage
Office Phone: (408) 558-5218
Cell Phone: (408) 761-6849
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