Lower Mortgage Payments can Increase WealthWritten by Ida Byrd-Hill
Creating and maintaining wealth is a very difficult task. Ask any millionaire!!! The delicate balance of living a dream lifestyle and holding expenses tight creates this difficulty. As a financial advisor, I have assisted people accumulate monies to live their dream life while discovering ways to reduce their necessary expenses.Everyone would agree mortgages are necessary expenses. Probably biggest expense most of us have. Mortgages present opportunity to secure income tax deductions while utilizing house to live. What if you could reduce your mortgage interest rate to 3% and be required to pay interest only for 5 years? Would you refinance your current house? Purchase another? While refinancing a client’s mortgage, I discovered such a mortgage. The client will save lots of money next few years. Here is his scenario: Client #1$500,000 Loan Amount Past30 Year Fixed @6.00%=P&I$2,997.75/ month 5th year loan balance$ 456,989.77 Equity (assuming no appreciation)$ 43,010.23 Current LIBOR ARM@3.00%=Interest only$1,250.00/ month Applied additional $1747.75 / month to principal for 5 years 5th year loan balance$ 362,370.82 Equity (assuming no appreciation)$ 137,629.18
| | 4 Thinking Points Before Buying a HouseWritten by Roger Sorensen
So you’ve been renting an apartment for a while and your friends are all buying houses and settling down to nice, quiet suburban lifestyle. Is this something you should be doing too? To put even more pressure on you, every other evening news cast is talking about rapidly increasing value of houses in your area. Before you rush out and buy first house you can get a loan for, perhaps it would be wise to stop and decide if buying a house is really what you should be doing. To help you, here are four things to think about. 1. How long will you live there? If your job requires frequent moves, or you are pretty sure you will not be in same city in five years, do not buy a house. Real estate prices do sometimes dip and if you move you may have to sell your house at a loss. 2. Are you a Flipper? Flipping is art of buying a house, living in it for a time as you fix and improve it and then selling it for a profit. You then buy another house, live in it for a time, and sell it for a profit. The risk here is similar to that in previous paragraph; resale value of house may go down. So if you are going to be a flipper, be sure to buy a house you would want to live in for next ten years.
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