Don't get emotionally attached to your mortgage...

I was reading today comments left on a blog in objection to the strategies taught by Douglas Andrew, which Bruce Weide of Tax Free Benefit Specialists teaches locally. The primary objections were over the attachment people have to their mortgage. Statements like, "the mental satisfaction of paying off my mortgage"...THAT'S THE WHOLE POINT of the strategies, to payoff your mortgage in a more efficient, more liquid, and quicker time frame.

What's the advantage of the strategy?

All else aside, the most basic concept is paying yourself the principal amount of the mortgage that you would typically pay to the lender. Seems fairly simple. Take out the investment portion of the whole idea for a minute. Who do you want to manage your money? You, or the bank? Who do you want earning interest on your money? You, or the bank? Who do you want to borrower money from in an emergency? Yourself, or the bank? When you need money...NOW, where can you get it from faster? Yourself, or the bank?

Yes, the whole idea takes discipline. That's where the investment portion is ideal. You can now tie up the lump sum, have access to it when you need it without qualifying, but don't have to worry about it either. Your savings is now in the form of your mortgage payment.

A side note for mortgage brokers...Most brokers feed on borrowers who come to them to consolidate debt. Give the borrower a loan for just enough to get debt free, then wait for them to come back in a few years when they are up to their neck in debt again.

The ideas taught here can steer home owners away from the perpetual refinancing to get out of debt game. With the right advisor working on your side, your goals will be discovered up front. Monies will be allocated and set aside so you don't have to rely on the credit card companies, and ideally, shouldn't HAVE to refinance again. That's my goal anyway, to put clients in a position where the next time they finance a home is because they WANT to for other investment opportunities, not becuase they HAVE to becuase they ran out of money.

Your comments and feedback are welcomed. I know this topic is highly debated. But even more interesting, is the feedback from debate I receive when folks say, yep, this is the way to go, then don't. Especially when a year later they're in the same old daily grind and haven't made any head way on saving, investing, or paying down their mortgage.

For more on the strategy, register for a live event, FREE from the Straight Talk Real Estate Radio Program. Click on the 'Events' link on the upper right side.

Drunken borrowing woes...

I caught a clip on MSNBC this morning where an analyist was speaking of the end of the easy money borrowing.

With the troubles in the sub-prime lending market, lenders of all levels are tightening guidelines, scurtinizing files, and even dropping some of their more popular programs. Programs we don't see readily available now include 100% purchase with Stated Income and Stated Assets. Although never designed as such, many borrowers took advantage and turned these into liar loans. Meaning, they overstated their true income to qualify. When you borrower too much money, and that money runs out, what do you think happens next???

Drunken borrowing was the term used to describe the frenzy of equity stripping to fund household spending. I think the term nailed the problem.

Homeowners around the country were pulling new equity growth from their homes for survival. When relying on new equity growth for income, and that income is suddenly removed...OUCH!

It was fairly easy to call up your bank or broker just a few months back and get money out of the home, now it's tougher.

Here's some tips to prepare yourself if you are considering an upcoming purchase or refinance.

1. Lenders want to see cash. That's right, prove you have enough already and don't need more to get more. Have two to six months of payments stashed away in a verifable account. The amount is two times your principal, interest, tax, insurance and home owners dues.

2. Document your income. Have available current pay stubs, tax returns, and w2's. Lenders are much easier when you can document your income. However, you will be limited to only borrowing what you qualify for...IMAGINE THAT!

3. If you have hard to document income, plan on only borrowing 80-90% of the homes value and be ready to source and document the funds you are using for a down payment. If you have cash just lying around, get it in the bank, today. Besides, your money can grow in the bank, not under the matress. Check out ingdirect.com.

4. Clean up the credit. We mentioned on the radio program, Straight Talk Real Estate, last weekend many tips to help you increase your FICO score. Check out the website, under free reports for 10 tips to a 720. And, how FICO counts inquiries.

So, going forward, plan on only borrowing what you can afford. Stay liquid so you can prove reserves (if you are paying principal on your loan currently, CALL ME RIGHT AWAY!) and stop putting more into the home than you need to.

Lastly, attend a Straight Talk event to learn why your money is better off with you than with the lender if you own a home.

Remember...the best real estate investment, is the investment you own.

Don't Fall Victim to Foreclosure...Here's How...

I'll never fall into foreclosure. I have a good job. I have plenty of money. I have sooo much equity in my home. I'll never fall into foreclosure.

Those are some of the first thoughts that popped into your head when you read the headline isn't it?

I hear it all the time. As announced on Straight Talk Real Estate, the reasons for foreclosure might confuse you. Yes, confuse you.

We immediately think that foreclosures happen to folks who bought too much home. Went above their means on the house payment. But, here's the SCARY TRUTH;

Loss of Job or other income change - 47%
Financial problems not related to income - 28%
Divorce - 14%
Illnes or Death - 7%
Legal Problems - 3%

So, #1 on the reason list is LOSS OF JOB!!! If you were to loose your job today, how long could you make it? One month, Two months, Three months...in my experience most home owners are not saving, are not liquid, and would be lucky to make it two months.

The simple answer for avoiding foreclosure, STAY LIQUID. Having access to cash and not needing it is far better than needing cash and not having access to it. Remember, when you apply for a home loan, you have to prove you DON'T NEED the cash to get approved.

I would love your comments related to these findings. I compiled the percentage data from various professional, articles, and other publishings.

A Lesson in Safety, Liquidity, and what the Affluent do...

It can't ever be over stated, those who have liquidity will come out on top. As liquidity adds safety and can add a rate of return if played right. I know you're thinking, 'messing with home equity is something my parents said I SHOULD NOT do'.

It's not there generation anymore. Nor did our parents and grandparents pay more than $70,000 for a home in Southern California. It's time to open up to some new ideas and ways of thinking, time to have an epiphany (an intuitive grasp of reality through something usually simple and striking). Yes, using your home equity is a reality that is being done everyday, and it is so simple yet striking when you see how it all works out on paper, and in the real world.

Next week, we'll reveal on the Straight Talk Real Estate Radio Show the main reason home owners get foreclosed on. If only they had taken the time to educate them selves on new ways to utilize their mortgage as a financial tool to create safety in their financial lives.

I find, through questioning, that home owners don't call to get the information becuase they are embarassed by their CURRENT financial situation. How embarrased will they be if they DO get foreclosed on. I don't know about you, but I felt much better the first time I went to a financial planner poor as dirt to get a plan put in place, now I know I won't have future embarassment. And now I have a PLAN. A plan that is working, and has been working for several years, and will continue to work into the future. And as my life changes, so will my financial blueprint.

How often have you refinanced your home becuase there was an urgent need for cash? I've done it, I've been there, and I didn't like it. But, what I find amazing, is we do it over, and over, and over again. As Albert Einstein once said, Insanity is doing the same thing over and over again and expecting different results.

Why is it, we as American home owners do this to ourselves? Continually do the same things over and over again?

It's time to end the insanity. Take some time to learn new ideas. It doesn't mean that you have to implement a strategy today, but at least you will see different ways of doing the same thing. Doing it differently could actually have a huge positive impact on your financial future.

If you haven't attended an event at Tax Free Benefit Specialists, what are you waiting for. There's a free event coming up on August 4th. Even if you have to drive 200 miles to get there, take the time out of one day to stop the madness. Protect yourself from future losses, start earning a rate of return, and have enormous liquidity like the richest people in the world. What's more, you can use these strategies if you have nothing other than your home, today!

Turn a 15 or 30 year mortgage into 8 with no extra money

John was doing everything right; he purchased his home several years ago at the bottom of the market, took a fifteen year mortgage to save on interest, and was making an addition $475 contribution to his principal balance every month. In addition, John was setting aside three percent of his gross income for his 401K retirement plan. John has 10 years and 8 months left on his mortgage today, and when paid off he’ll be ready to retire with $163,000 in his 401K, YEAH…RIGHT?

The scary truth is that John is just like most of us, we think that our mortgage is a commodity and we better get out of it as quick as possible. What John didn’t know was that if he were willing to restructure his retirement planning, and include his biggest assets, his home, into that retirement plan, at the end of the same 10 years he could have an additional $90,000.

Well, John said when he paid his home off he would continue to make his mortgage payment into his retirement savings for 10 more years. He knew, he would be mortgage free and have $631,000 in his retirement savings to generate about $38,000 per year in retirement income, which he said he could live on. What John didn’t know was at the end of that additional term, by restructuring his debt 20 years earlier, he could have retired with $1,300,000 generating just shy of $100,000 per year of income. Oh, and by the way, when restructuring his debt, he didn’t pay the house off so not only would he have had more income, he would have maintained his largest tax write off, mortgage interest.

But wait, he still has a mortgage payment you say. Yes, after his mortgage payment, John still has almost $80,000 per year of income versus $38,000. The restructure wouldn’t cost John any additional money; it would actually free up some monthly cash flow for him during his working years.

Had John only known how to implement these strategies? Had John only taken the time to seek out the advice of a professional? If John had only known that his mortgage could be the key to so much additional wealth, maybe, just maybe, John could have enjoyed a round of golf every day of the week during retirement. Unfortunately for John, he didn’t get the facts and he has realized he’ll need to continue to work for nearly 20 more years after his planned retirement.

Did I mention, had John restructured his debt, he could have paid his mortgage off in under 8 years, versus the 10 years he had remaining had he chose to do so?

What John didn’t know, his future held a job layoff for him, all his extra liquid cash was tied up in a 401K, he couldn’t make is mortgage payment, and the bank foreclosed on him. Had he only had that side account, he could have lived for 10 years on those funds and still had his home he worked so hard to payoff despite the job loss.

These strategies are used everyday by people in every walk of life. These strategies can be the key to achieving the retirement of your dreams. We invite you to visit www.StraightTalkRE.com and click the event link on the home page for more information. Come join us for a four hour, life changing event.

For more real estate financial education you can tune into KRLA AM-870 every Sunday at 6pm to hear Straight Talk Real Estate. Visit the website at www.straighttalkre.com to download many valuable free reports.

This names and situation in this story are fictional; however represent the lives of so many.