It's Your Home; Not A Bank, Not An ATM

By
Real Estate Agent with Big Block Realty 858.232.8722 CA BRE# 01261476

Good Lord, did we learn nothing?

 

So, maybe you shot yourself in the right foot in 2007?

This commercial wants you to shoot the left foot too in 2018. 

Do Not Do This!

 

Many factors contributed to the worst economy, real estate market and suicide rate since the Great Depression, but let's face it; Big Banks were the catalyst, were never punished - bailed out in fact and now they want you to "go back Jack, do it again, wheel turning round and round". (Steely Dan)

 

Your House Is Not An ATM!

NO! No, No, No...Here's exactly how to repeat the worst real estate market depreciation since The Great Depression. This is why online mortgage companies, Apps, online real estate sites like Zillow and other offenders ...do...not...care...about...you...only taking your money!
 
 
Only a trusted advisor like my mortgage partner- Jason E. Gordon  of Amerifirst, my team- The SoCal Real Estate Connection or myself would tell you this is the worst way to think of your home.
 
 
It's not an ATM, it's a home or it's a business (investors) but it's not there to buy cars, vacations and jet skies. Barring capital improvements or an emergency, leave your equity alone...real estate is a long term investment (and a home), it's not for day trading or "keeping up with the Joneses"-The Joneses don't care about you either! Your home is not a bank!
 
 

 

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Topic:
Lending / Financial
Tags:
san diego real estate
real estate success
real estate
great depression
good decisions
history repeats itself
poor decisions
thomas j nelson realtor
bad advice from commercials
do not repeat the mistakes of history

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Rainmaker
2,631,822
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Thomas I had a big argument with one of my buyers, six months later he wants to refinance to pay of credit cards... told him it is a stupid idea....Endre

Jan 09, 2018 09:59 PM #1
Rainmaker
3,506,256
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

People were encouraged to take equity out of their homes to enjoy with no thoughts of the future.

 

Jan 10, 2018 01:50 PM #2
Rainmaker
427,990
Jason E. Gordon
AmeriFirst Financial Inc, San Diego, CA - San Diego, CA
Sr. Mortgage Loan Officer, CMPS, RCS-D, CDPE, CMHS

Transactional based mortgage call centers like these are predicated entirely on originating refinances to generate their revenue (because Realtors know better than to trust them with purchase loans). That said, there are 2 types of refinances: 1) Rate & Term (where you simply exchange your current loan for a new one with a better "rate" and/or "term") or 2) Cash-Out (where you pull cash-out for various reasons). When interest rates rise, Rate & Term refinances dry up, which causes these companies to change their narrative and suggest/encourage Homeowners to pursue Cash-Out refinances. History has a way of repeating itself because many people do not identify the bigger picture (and these companies have too much money invested to simply close down when rates go up). 

 

With respect to Endre's comments above, debt consolidation refinances sometimes have merit...I would not rule out the logic of that plan without looking closer at the numbers involved...especially if the Client is committed to "cut up" his/her credit cards after they are paid off. I have spreadsheets which help Borrowers determine the bigger financial picture, and the math never lies.  For example, if a Homeowner consolidates $40K of credit card debt into one new mortgage payment and subsequently frees up an extra $1,000 per month, this can be a beneficial strategy if they pursue one/both of the following strategies with that extra $1,000:

1) Term Reduction -- "overpay" their new mortgage payment with that extra $1K each month...this will save significant finance charges (and cut off a significant amount of months/years) over the life of the new loan

2) Asset Accumulation -- deposit that extra $1K each month into a financial vehicle (mutual funds, bonds, etc.).  Over time, the money is presumed to increase substantially via returns + compound interest

 

As always, everything should be analyzed on a case-by-case basis, but I think we are all in agreement that a Homeowner should never use their equity as an ATM machine.  Alas, it will happen...and history will repeat itself (hopefully not on a level comparable to the mid-late 2000's).

Jan 11, 2018 11:01 AM #3
Rainer
109,363
David A. Weaver
Peoples Bank & Trust Co. - Scottsdale, AZ
24 years helping folks finance their dreams.

Assets feed you and Liabilities eat you.  Your primary residence home is your families shelter and your biggest liability, equity is an illusion and is only on paper, exchanged at the sale of one house and the purchase of another where you end up with another liability.  When you pull cash out to pay off other debts, you're swapping one form of debt for another.  Granted your re-structure should improve your monthly cash flow, but make no mistake you still have the same amount of debt and you paid good money in either fees or rate or both to get it.  Do the numbers, you don't get a pass on the math!

Jan 12, 2018 09:31 AM #4
Rainmaker
1,336,695
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

Some people just don't get it, but then again, maybe they are onto something while the rest of us slog away to pay the bills these guys are having a great time. Just kidding though.

Feb 02, 2018 08:35 PM #5
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Rainmaker
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Thomas J. Nelson, Realtor, ePRO, CRS, RCS-D

Co-Host of Mail-Right's: Real Estate Agent Podcast
Referrals & Sales-free Help / Info Here.
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