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The Single Most Important Thing you Must Know if you Own a HomeJeff Blovits Dont ever, ever lose your job! Thats right, its not your credit score or your assets or your equity or even Location, Location, Location that matter the most, it is whether or not you have an income stream capable of supporting your mortgage. Most people think of their home as the safest of investments that they have. It can be but only if you manage it correctly. If you have equity in your home, you are subject to the risk of loss of that equity at any time you can no longer afford to make your payments. It doesnt matter how many years you have paid perfectly, if you for some reason cant, the bank will not let you slide for a few months to be nice. As a matter of fact, the more equity you have the more attractive it is to them to foreclose on you. That to me is the exact opposite of a safe investment! I counsel my clients to understand that the most important thing they want to maintain is liquidity. They want to have the access to enough cash or near cash reserves that they are in charge or their financial choices. This may not seem like a revolutionary idea but I would argue it is something that a great many people do very poorly. My clients are above average as far as wealth in their socio-economic groups. They tend to have more wealth per average income or job position than their peers. And most if not all of them have less than 5% equity in their homes! There are many factors that contribute to wealth and putting your home equity to work isnt the magic criterion that assures you will be wealthy. But consider why these people are positioned this way and maybe the connection will become clear. In addition to liquidity, other benefits include increased safety, rate of return, tax savings, elimination of non preferred debt and establishing an emergency side or reserve fund. How does all of this relate to income Consider that if you lose your income you lose the ability to get access to the equity in your home. And guess when most people need access to that money the most You guessed it, when something unexpectedly affects their income stream, like a job loss. Lenders will make loans to someone with bad credit, with no assets or reserves and with limited time in a certain field of work but if you dont have the ability to pay them back when you lose your job, they generally dont want to lend you money! I would be willing to wager that most of you have either been affected by corporate restructuring or know someone who has. There are also a substantial number of people who lose jobs either because they or someone in their family becomes ill or are injured. In those situations would you be better off with $50,000 in an emergency fund to help you get back on your feet, pay doctor or home care bills, and allow you a cushion to find a good job instead of the first one you could find or have $50,000 in equity in your house that you couldnt access Now to finish up on the wealth equation as it relates to home equity. One thing that most people dont understand is their home equity is earning them a 0% rate of return. There are 2 components to your home value: what it cost to purchase it basis and appreciation. In 5 years your house will be worth the same whether you have a mortgage or dont. Any money you choose to put into the house is simply a return of your investment. If you are willing to rethink the wealth equation and put your home to work for you it can be a great source for turbo charging your wealth. If you coordinate that with an integrated financial plan involving your planner, accountant and insurance agent then the results can truly be outstanding! Jeff Blovits
| ![]() | ![]() | ![]() | RELATED ARTICLES Why You Need a Home Loan Countrywide Loan From a small office in 1969, home loan countrywide has achieved recognition among consumers and investors as one of Americas leading home finance companies. Evidence of growth and industry leadership is home loan countrywides inclusion in the S&P 500, Forbes 500 and Fortune 500. Home loan countrywide began with a vision - to make the dream of homeownership accessible to everyone. Over the years, the company has grown, as have the ways in which they serve their customers. They have leveraged their skills in mortgage banking into diversified businesses that work together to provide customers with a complete range of financial services under one roof. Their diversification includes capital markets, insurance and a recent expansion into banking services with Countrywide Bank. In addition, home loan countrywide is also bringing a brand of financial services and customer satisfaction to the United Kingdom.Home loancountrywide is involved in the development of world-class proprietary financial systems has provided them with a sizable competitive edge and given them a front-runner position in penetrating financial services markets both domestically and internationally. How To Simplify Your Real Estate Buying/Selling Experience Today’s real estate consumer has a lot to consider during the sale or purchase of a home.Be it waiting for the right buyer/seller, mortgage rates, or the moving truck, the experience can take a bit of patience on the part of the consumer.With this in mind, it is incumbent upon real estate brokers/agents/firms to institute services that will the buying/selling process hassle-free. Credit and Debt Relief--A One Stop Solution Amy Wright, 34, was extatic when her realtor showed her the three bedroom townhome overlooking the lushious golf course. It was exactly the home she was looking for. The interior was sunny and bright, with a newly remodeled kitchen, spacious bedrooms, and the perfect little study area to set up her new home office. It had a spectacular pool and a lovingly tended flower garden. Best of all—the seller had to move immediately, so the home was a steal and miraculously within her budget! Amy was already making moving preparations when suddenly, a devastating blow paralyzed her plans. Her credit application for a mortgage had been denied. She couldn’t understand how this had happened—just a year ago, her credit had been almost perfect! The last year had been a little tight, and sure she had a few late payments here and there…but she had no idea it was so bad that now she couldn’t even get the home of her dreams. Credit Traps Snag Consumers Nearly 20 years ago I worked for a small consumer advocacy organization in Washington, DC. Each week we received sacks full of mail from consumers across the country requesting our list of credit cards with low interest rates and no annual fees. If you wanted a low interest rate on a credit card back then, you often had to apply to a bank in Arkansas where interest rates were capped by state law. Wealth And Your Net Worth Wealth and Your Net Worth by C.C. Collins http://networthpublishing.com Business or Hobby...What Would the IRS Call YOUR Business One thing we know for sure… direct sellers start their businesses for a wide variety of reasons. Some want to build a dynasty, some want the tax benefits, some do it to buy and share a product they believe in, while others are simply looking for a way to have fun and make a little money on the side. 8 Point Checklist, Evaluating Online Vendors Here are 8 things to consider, when evaluating lenders online:Website DesignPrivacy PolicyAbout UsPopularityReputationShort FormPoints, Fees, Terms and RatesCommunication Understanding Bridging Finance Bridging finance, also referred to as "bridge loans" and "bridging loans", have nothing at all to do with re-constructing the London Bridge. Bridging finance is typically a short-term loan that a business uses to supply cash for a real estate transaction until permanent financing can be arranged. The word "bridge" conveys the fact that the loan is designed to get you over a temporary obstacle. A typical use for a bridge loan is to cover situations such as when a company needs to close on a new office building before having sold their old one. They would use the proceeds of the bridge loan to continue making payments on the old building until it is sold. Refinancing your home - How and why Chances are you may need a little extra money to get some work done around the home or perhaps your current interest rate is 7.5% and the prime interest rate is 6.0% there is a benefit to restart the clock on an existing mortgage and save thousands of dollars over the life of the loan. The first thing you must realize is that refinancing your home can also be tax deductible, meaning that you will receive an extra tax advantage for the closing costs associated with a refinancing no matter what the condition, even in bankruptcy! Lifes True ROI al debt load and ROI, whether the industry as a whole is in a slump,whether there are too many partner or legal problems, whether futuredemand will materialize and so on and so forth. While these questionsare certainly relevant, the most important question that a small ormedium-sized business owner should ask him/herself is: The 5 Biggest Blunders in Business Development Effective communication skills are essential to successful business development.Yet they’re often under-emphasized and sometimes completely ignored.WhyBecause we communicate so much and so often approximately 20,000 words per day we often take it for granted.But regardless of how good your product or service is and how much expertise you have in your area, it all goes to waste unless you can communicate it to others.When you actually get the chance to sit down with a potential client and discuss doing business together, don’t blow it by committing one of these big five business development blunders. 5 Magic Points: Should I BUY or RENT my HOME Buying a Home is the American Dream. It is more than a place you put your hat at the end of the day. It defines you, protects you, and prospers with you. Yes, Home Ownership is a noble pursuit, but it always starts with this first, important question: Should I buy or Rent my Home The answer, surprisingly, is not so obvious. Buying New Construction...How Do I Begin The prospect of shopping for a new construction residence can be quite daunting, but the rewards of owning a brand new home out-weight the disadvantages if you know the potential pitfalls. The following are important considerations: Overall Dollar Budget, Location, Cost Per Square Foot, Finishes, Upgrades, Parking and Delivery Date. Should you choose to refinance Refinancing has become a valid option for many individuals with high interest rates on their mortgage. Refinancing is essentially a replacement loan, with a different lender and hopefully a lower interest rate. OPM - The Art Of Leveraging Equity lender, hard money lender, private investor or what ever term one uses can be a great source of funds to do real estate transactions and the question of how to find them comes up often! Top 10 Things to Consider on Home Loans Here are our Top 10 most important things to consider when shopping for a Home Loan, Equity Line of Credit, or Refinance, courtesy of LoanResources.Net:Down-PaymentFixed Versus Adjustable RateAPRLoan TypesLoan Amount Qualification, IncomeLoan Amount Qualification, ExpensesEmployment and Credit HistoryPointsSub-Prime LoansShort-Forms Build, Dont Blow, Your Annual Bonus NC—More and more companies are incorporating a bonus structure into compensation programs. Bonuses are generally based on performance and are tax advantageous for companies. Preventing Foreclosure Proceedings and Understanding Your Options Every year over 8 million homeowners are seeking help preventing foreclosure proceedings. This is a stunning 30 year high. Experts project that by 2006, 12 million homeowners will be teetering on the brink of foreclosure. Many homeowners are not aware that the can prevent foreclosure and save their house. Did you know that you can’t stop the proceedings up to an hour before the auction takes place Understanding Real Estate Terminology Purchasing a home can be a complicated and confusing process, especially for first-time buyers.Throughout the process, first-time home buyers will encounter a variety of unfamiliar real state terms. There are several key terms associates with purchasing real estate that are helpful to learn. Become A Mortgage Auditing Specialist According to U.S. Government Auditors more that 45% of all home mortgages and 75% of home equity loans contain miscalculations or errors in favor of the lender. These errors are costing homeowners to be overcharged billions of dollars per year, and with the number of home mortgages being refinanced because of low interest rates, the figures can only increase. ![]() |
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