Archive for the ‘Budgeting’ Category
Ring in the New
As we celebrate a new decade, I want to say thank you for your continued support, and share with you our vision for 2010. It is often said that challenging times build character. The past two years have certainly been character building for me as a mortgage advisor and the owner of a small mortgage company. If ever there was an industry marked by a target, it is the mortgage industry. Given the immense amount of scrutiny and regulatory change, I am blessed to be one of the 40% who has survived in a profession that has lost 60% of its workforce. With continued changes and interest rate volatility, 2010 will likely be another interesting year.
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Time for a Home Makeover?
Many Americans today are stuck in the proverbial rut of debt. With the cost of credit card interest rising, and credit harder to obtain, some have reached the end of their rope. Others may not be in such critical circumstances, but may have improperly structured debts that are costing more interest than they should.
One of the greatest financial tools is tax deductable mortgage debt. For someone in a 25% marginal federal income tax rate with a 7% state income tax rate, a mortgage with a fixed interest rate of 5% will have an after tax interest rate of 3.4%. When fighting to get out of debt, it is much easier to make progress paying down a mortgage costing only 3.4% after tax vs. an unsecured credit line at 10%, or even a car loan at 6%
Don’t Cannibalize Your Equity
Don’t Cannibalize your equity by paying closing costs. One of the biggest mistakes homeowners make is continually adding to their principal balance by accruing loan fees to refinance every time an opportunity arises to lower their interest rate. With the average homeowner refiancing every three to five years, it’s no wonder mortgage balances are not reducing. Before they recoup the closing costs of their last mortgage, they refinance again, resulting in an ever-increasing loan balance.
The Most Valuable 15 Minutes
For most people, a mortgage is the largest debt they will carry. However, few homeowners have a mortgage professional continually monitoring their mortgage against the market, and making suggestions as to when it is wise to make a change. As a result, too many people pay more than they should for the debts they carry.
Pick Up Your Weapon and Fight
Many of us have learned tremendous lessons from this recession. It is often through our most painful experiences that we grow the most. This is the time for all of us to take action and commit to make things right in our finances so that we are better prepared if this happens again. I know that for me personally, I have discovered areas of financial risk that I will never allow myself to be as vulnerable to again.
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