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Equity repositioning strategies
This document discusses options for homeowners to leverage their home equity. It presents 4 options: 1) do nothing; 2) handle it yourself; 3) work with a traditional realtor/lender; or 4) work with the author. It then discusses strategies for making one's mortgage work for them, including choosing the best mortgage type and using extra payments to build savings rather than pay down the mortgage early. Examples are given showing the benefits of this approach over the traditional method of paying off the mortgage quickly. The document promotes working with the author/company to utilize these strategies to better leverage one's home equity.
Equity repositioning strategies
- 1. Harnessing the AmericanDream Getting The Most Value For Your Home Equity!
- 2. Let’s Examine YourOptions Option 1 You don’t have to do anything. I will do my best to give you all the information you need and if you are not ready to make a decision yet, that will be fine. Option 2 You can do this on your own. Every year thousands of homeowners buy/sell/borrow on their own. So when we are complete, if you choose to do this on your own, let me know and I will understand. Option 3 You can work with a traditional Realtor/Lender. If you don’t think my model of doing business is for you, just let me know. I can even refer you to some good agents in my office that might better serve your needs. Option 4 You can work with me.
- 3. Make your MortgageWork for You! The Old Way of Thinking: Get the lowest-rate mortgage Start a bi-weekly mortgage program Send in additional money whenever possible to reduce the principal balance This is the Depression Era mindset that has been burned into the American psyche But is it possible there is a better way?
- 4. The New Wayof Thinking The rules have changed! Choose the best mortgage, not necessarily the one with the lowest rate. Subscribe to a bi-weekly mortgage plan only AFTER all other non- tax deductible and high interest rate debts are paid in full Only send extra money to your mortgage company after you have paid yourself first! Your goal is to make the smallest payment with the biggest tax-break
- 5. “Here are 5great reasons to carry a big, long mortgage and never pay it off.” Ric Edelman – New York Times Best Selling author of the New Rules of Money 1. Mortgages don’t lower home values Your home appreciates or depreciates whether or not you have a mortgage. In fact, most people discover that, over time, their mortgage balance falls while their home value rises – creating substantial wealth they never expected 1. Your Mortgage is the cheapest money you’ll ever buy Most people need to borrow money during their lives, so why pay 18% to credit cards when you can borrow at rates of 8% or even less 1. Your mortgage is the best way to lower your taxes Interest you pay on personal loans, auto loans, and credit loans is not tax deductible, but for most of us, the interest we pay on our mortgage is fully tax-deductible, making the cheapest loan you’ll ever have, even cheaper
- 6. 4. Get thecash out of the house - while you still can The main reason people turn to borrowing is because they have little or no income. But if you ever suffer a job loss, major medical, or other financial crisis, you could find yourself unable to get a home loan. That’s because lenders don’t like to lend money if you are in financial difficulty. That’s why you should get a big mortgage now, before you need it – and while you still can. 5. Your mortgage becomes even cheaper over time Depending on the loan you choose, your payment never rises – but your income likely will. That means today’s mortgage payment becomes increasingly easy to pay! The Rules of money have changed! “Here are 5 great reasons to carry a big, long mortgage and never pay it off.” Ric Edelman – New York Times Best Selling author of the New Rules of Money
- 7. A Tale ofTwo Friends Our story begins with two friends, both earning $70,000 a year. They both have $40,000 in savings and are both buying $200,000 homes Frank Borman “The Old Way” 15 year mortgage at 6.38% APR $40,000 big down payment $0 left to save $1,383 monthly payment (56% tax deductible 1st year 33% average) $1,227 average monthly net after-tax cost Sends $100 monthly to lender in effort to eliminate mortgage sooner Neil Armstrong “The New Way” 30 year interest-only mortgage at 7.42 APR $10,000 small down payment $30,000 remaining to save $1,175 monthly payment (100% tax deductible 1st year 64% average) $799 average monthly net after-tax cost Adds $100 monthly, plus $428 saved from lower mortgage payment to savings component earning 8% rate of return
- 8. Who Made theRight Choice? Frank Borman Received $14,216 in tax savings Has $0 in savings components Neil Armstrong Received $22,557 in tax savings Has $83,513 in savings components Results after 5 years
- 9. What If BothFriends Suddenly Lose Their Job? Frank Borman Has no savings to get through crisis Can’t get a loan-even though he has more $74,320 more in equity than his friend because he has no job Must sell his home or face foreclosure because he can’t make his payments Now he must sell in a hurry, and at a discount, in addition to paying realtor fees (6-7%) Neil Armstrong Has $83,513 in savings to tide him over Doesn’t need a loan Can easily make his mortgage payments even if he’s unemployed for years Has no reason to panic since he’s in control- remember…Cash flow is King!
- 10. The Moral ofOur Story The “Old Way” can be devastating to your financial future You should never send extra money to your mortgage company until you’ve paid yourself first All of your equity is at risk until your last payment is made Instead, put that money to work for you! Once you have all the facts, it’s easy to make the right decision!
- 11. The Starpointe FinancialPlan INCREASE CASH FLOW Free up wasted resources Manage expenses PRESERVE YOUR ESTATE Help reduce estate taxes Build a family legacy MANAGE DEBT Consolidate debt Strive to eliminate debt CREATE EMERGENCY FUND Save at least three months’ income Prepare for emergency expenses ENSURE PROPER PROTECTION Protect against loss of income Protect family assets BUILD LONG- TERM ASSET ACCUMULATION Outpace inflation Reduce taxation
- 12. Starpointe Mortgage isIllinois’s premier mortgage provider, offering a wide array of revolutionary concepts to help make your mortgage work for you! How to Make Your Money Work for You Leverage old money that you are already spending to create new money that you can save Harness the power of compound interest to work for you, not against you Educating and empowering our clients is our focus at GSF Mortgage
- 13. No matter whatyour approach, our inventory of services can help you Traditional Mortgage Products Fixed rate loans ARM loans Balloon loans Second mortgages Interest-only loans Products that allow you to pay just the interest each month, maximizing your tax benefits and freeing up more money The Power Option Loan An ARM loan that allows you to choose from four payment options each month, giving you maximum flexibility and control
- 14. GSF Mortgage hasa diverse selection of mortgage products from some of the most respected names in the industry including:
- 15. What would youdo differently if you had the option to lower your monthly mortgage payment? Would you… Pay off high interest rate debt? Save more for retirement? Prepare for your children’s education? Build more wealth accumulating assets? Plan a family vacation? Prepare for a financial emergency? With GSF Mortgage the choice is yours!
- 16. Now that youknow how to get better value for your money, let’s see the impact of the money you save over time with… The Rule of 72 Divide 72 by the interest rate to find out how long it takes your money to double Age 4% Age 8% 29 $10,000 29 $10,000 47 $20,000 38 $20,000 65 $40,000 47 $40,000 56 $80,000 65 $160,000 $10,000 $50,000 $90,000 $130,000 $170,000 $210,000 29 47 65
- 17. If You AreLike Most People, You’re Ready To Take The Next Step Let’s get started today! Let us review the results, and take advantage of the mortgage program that best fits your needs It’s time for you to harness the American Dream and make your money work for you!