Mortgage Elimination and Bi-weekly Payments -- Which is best for your client?

By
Services for Real Estate Pros

In this recession, homeowners are faced with mortgage problems, upside down home values and larger debts (credit cards and loans).  What strategy do you recommend to your client to pay less on their homes, if any advice?  What do you impart to your clients to enable them to re-enter the marketplace sooner versus a delayed entry later based on 70% of homes losing equity (as reported by CNN)?

Comments (5)

Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Christopher:  If 70% of the homes are losing equity, I am not sure how much good is accomplished by injecting additional cash money into an account that is already upside down.  I guess it all depends.  If a value is dropping, I might prefer just to put those funds into a CD of some sort... with a guaranteed yield... rather than something that is still going downhill.

Dec 26, 2008 06:40 PM
Vicente A. Martinez
Prudential Douglas Elliman Licensed Real Estate Salesperson - Woodhaven, NY
Realtor, Brooklyn - Long Island - Queens Homes

Hi Christopher and welcome to active|rain.

I've written countless articles here and on other blogs that I have about possible solutions for homewners. Here's the latest one if you care to check it out -  Loan Modification Q&A - Top 10 Questions Answered- Question #4 - Will a loan modification stop my foreclosure?

There are thousands of tips, tools, and tricks of the trade here. Be sure to check them out. Best of luck and see you around.

Friend me on Facebook 

Follow me on Twitter

Dec 26, 2008 08:50 PM
Teresa Thompson
My Mortgage Teacher - Schertz, TX

Welcome to the Active Rain Network.

Dec 27, 2008 12:31 AM
Anonymous
Tim Smith

Chris,  If I understand you correctly, your question ask what does a current home owner do to regain or restore home equity based on the market change.   The reply provided certainly will not put a homeowner at ease based on what has happened.

 "Christopher:  If 70% of the homes are losing equity, I am not sure how much good is accomplished by injecting additional cash money into an account that is already upside down.  I guess it all depends.  If a value is dropping, I might prefer just to put those funds into a CD of some sort... with a guaranteed yield... rather than something that is still going downhill."

The best strategy to regain the home equity is to pay the home mortgage faster than the mortgage schedule and/or establish a bi-weekly.  I looked at you link -- most real estate professionals really don't understand this program as excellent as it maybe.  I have used it under another company and it worked great but again you will have to take your time and educate the group if this is your purpose. 

Welcome to the group!

Dec 27, 2008 12:54 AM
#7
Christopher Herring
San Antonio, TX

Tim thanks for your feedback.  In fact the point to be made is that a homeowner can reduce their APR rate and pay-off their home sooner ( on average 8-years earlier on a 30 year mortgage) if they use an automated bi-weekly payment system or best case if they have an open equity line of credit, they can reduce a 30 year mortgage to 8 to 12 years and leverage simple interest for the mortgage's compounding interest.  I agree the first reply doesn't take into account LEVERAGING what a person is obligated to pay.  If more real estate professionals learned these facts, they would be able to re-enter prospects quicker into a home buying situation.  Certainly if the marketplace encourages clients to invest in CDs, or other investments, the likelihood the person will sell their home in 5-7 years is unlikely because they are still living in a home that will not sell because the owner owes more than he/she can sell it for.   Our link does explain this better at http://www.mymortgageteacher.com 

And people I talk to say I can do it myself ....well certainly not true.  Less than 5% of the nation actually has the discipline to do it (like weight loss).  It is still amazing that less than 30% of American homeowners actually own their homes with their mortgage paid off.  This is the opportunity real estate professionals can leverage to build new clients and talk to old clients.  70% of the marketplace needs help with their mortgage.

Dec 27, 2008 01:37 AM