Home Equity Loan – Still a Better Idea Than a 401(K) LoanWritten by Charles Essmeier
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interest back to yourself. The additional disadvantages are considerable, though. The money you borrow from your retirement account was money invested before taxes. The money you pay back is after-tax money, effectively increasing amount that has to be paid back. Worse, should you lose your job, 401(K) loan must be paid back immediately, in full. Should this not be possible, loan is treated as a distribution, requiring payment of a 10% penalty in addition to state and Federal taxes. With job market still rather volatile, additional risk of borrowing against a retirement account is substantial.
Borrowing against a tax-deferred retirement fund is rarely a good debt consolidation option. The tax disadvantages, threat of penalties and immediate repayment and loss of compounding generally make such a loan a bad idea. Those with existing student loans should probably keep them; interest is tax deductible and rate is still lower than with most other consumer loans. For most anyone else, a home equity loan would be a better choice, offering deductible interest, fewer risks, and a fixed repayment schedule. Anyone considering a consolidation loan should consider all of these options carefully, as cost of choosing poorly could be great.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation and credit counseling information and HomeEquityHelp.net, a site devoted to information on mortgages and home equity loans.
Booming Real Estate Profits From Baby Boomer InvestingWritten by Chris Anderson, PhD
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Q: What kind of preconstruction properties am I looking for? A: This depends on wealth category you are seeking but suppose we are targeting wealthy but not super rich. The best way I know to do this is imagine that you have just closed out all your real estate investments in a few years and you are worth $5 Million. Where would you like to live? What "lifestyle" would you want? Would you be near water, or golf, or mountains, etc.? Now if you know you don't think like most people, you may have to alter a little bit and try to think what majority of people would want that are worth maybe $1 - $10 million. Realize that these people want homes for most part. If you wanted to play this, then purchasing either raw home sites (land) or finished home may make sense. Q: Can you give me an example? A: Sure. In MasterMind Group, we just introduced a preconstruction property in North Carolina mountains and we just finished our Boots on Ground work there. The mountains are certainly a draw to many people. When we first got on location, we saw lots of other properties that looked like nice places that good be purchased for ˝ of our target investment. Some of these had great views on nice lots. Quite frankly, we were a bit concerned. Once we had gone to property, our perspective changed 180 degrees. We were taken to see a preconstruction development that spans multiple mountain peaks and truly has spectacular settings. Each future homeowner will have large 2+ acre lots that are extremely private. In addition, there is an extensive effort to keep this development completely natural (no lawn mowers----YEAH!!!). While hard to describe in a paragraph, this property is unlike any that I have seen before. When you go on property and get full picture, I have no doubt that you could buy and hold this for 10-15 years and make a great return. However, there is a twist. It turns out developer is really good at marketing but better yet, they are getting free exposure that is expected to bring over 50,000 people ON SITE during next year. Ok, this might be a property you can buy now and sell for a tidy profit in short order….. If you're wrong, then just hold it a little while longer. Q: That sounds nothing like a preconstruction condo? A: That is correct but concept is same. Get into something where you are confident that a lot of people will want it down road, manage your risk, and hopefully make really strong investment returns. As you will see in upcoming articles and project announcements, we think much more broadly than just preconstruction condo's and we encourage you to do same. In our opinion, baby boomer market acts very differently than "investor market" and right now, we believe there is lots of preconstruction opportunities in right kinds of properties.
Dr. Chris Anderson is a co-founder of www.GetPreconstructionDeals.com and is referenced in many venues including the New York Times and USA Today. Get a 3 month trial to his Mastermind Investing Group at GetPreconstructionDeals.com.