WEALTH CREATION AND MORTGAGE PLANNING

Written by Jeff Blovits, Franklin Bank


by Jeff Blovits , Franklin Bank SSB p. 898-5656 copyright, Franklin Bank 2004 for more click here

What if I were to tell you that almost everything you have been told about what to do with your home has been absolutely wrong and that one ofrepparttar worst ways to build wealth is through your home? And what if I further went on to show you that anyone who perpetuates this myth probably is not your best source for accurate financial information?

Most of you right now are looking atrepparttar 112339 byline a couple of times to see if this article is REALLY being written by a mortgage person. Some of you have taken this as final, unequivocal proof that all mortgage people really do sit around a big table of tea cups wearing hats with fractions on them! No you are not in Wonderland but if you keep reading you might find many of you have been for a long time now.

One ofrepparttar 112340 buzzwords or catch phrases floating aroundrepparttar 112341 financial circles is "wealth creation." This has gained prominence due torepparttar 112342 ability ofrepparttar 112343 planner or agent to broaden their focus on overall wealth with their clients instead of just return on a particular investment. While a holistic approach is a very good one, what wealth creation strategies often lack are a defined strategy for accomplishing well, wealth creation! These plans often fail or vastly under perform because they don't properly account for one ofrepparttar 112344 biggest parts ofrepparttar 112345 wealth picture and that'srepparttar 112346 home!

WHAT DID HE SAY?

Now that's not a typo and I didn't contradict myself fromrepparttar 112347 first paragraph. You see, most people believe their home is something completely separate fromrepparttar 112348 rest of their financial planning. It's this sacred cow that's over inrepparttar 112349 green grass munching away while everything else in their financial life is trying to figure out how to grow withoutrepparttar 112350 food it needs. The sooner people realize that EVERYTHING they do is an investment decision ,repparttar 112351 better off they will be. The implication of your decision is not simply what you obtain by your action but what opportunity you give up.

So, back to wealth creation and mortgage planning. In borrowing some thoughts from a great financial partner of mine, Brent Gilmore, we can summarize what we typically look for as far as characteristics of a good investment as:

• something that earns us a good return based on our risk

• is liquid if we need it

• is not subject to additional restriction to access it once we have it

• is not at risk of loss.

The reality is your home is absolutely notrepparttar 112352 definition of a good investment. The reasons are fairly clear if we break them down. What if I told yourepparttar 112353 MAXIMUM return you could make onrepparttar 112354 purchase of your home was 0%?

Here's where we hitrepparttar 112355 rabbit hole.

First we must explainrepparttar 112356 difference between return of investment and return on investment. Return OF investment is simply getting backrepparttar 112357 money that you put in. Return ON investment is difference betweenrepparttar 112358 end value of your investment andrepparttar 112359 amount you invested.

Whether you pay cash for your home or pay nothing down, your home mortgage will be worthrepparttar 112360 exact same in 1 year, 5 years, 10 years or 30 years. It is true that if values keep going up you will make a positive return ON investment but that is independent ofrepparttar 112361 return OF your investment. Even that fact has some doubt clouding it, but that's another article.

PAGING CHICKEN LITTLE

Now let's step back from all ofrepparttar 112362 sky is falling stuff and clear some things up. Your house may well continue to appreciate in value, especially in a strong local economy like Columbus . But appreciation as I showed you above has absolutely nothing to do with return OF capital . Remember that if you bought a $300,000 house today, paid cash for it and turned around in 1 year and sold it for $350,000 you would have experiencedrepparttar 112363 same appreciation as if you had put $0 down to buyrepparttar 112364 house. Your $300,000 was invested in an asset that yielded 0% during its use.

The key to this is that when you pay your mortgage you "choose" to investrepparttar 112365 money in your home instead of in other options that could return you more . Lets Considerrepparttar 112366 consequences of not being able to pay that mortgage one day:

• Willrepparttar 112367 bank give you backrepparttar 112368 money you paid onrepparttar 112369 mortgage and all ofrepparttar 112370 appreciation when they sell your house in foreclosure?

• Will they lend you more to help you get back on your feet at terms as good or better then you have now?

• And will they do it without asking you to prove your ability to repayrepparttar 112371 new loan when you couldn't payrepparttar 112372 old one?

Sounds silly, but this is what happens allrepparttar 112373 time.

Now wait, you say, I have a paper that shows me that if I pay twice per month I will pay off my mortgage 8 years sooner and save $84,000 in interest! You are right, you will. BUT is it a good choice if that money that you borrowed at 4% (After factoring in tax savings onrepparttar 112374 interest) could be returning you more, guaranteed , elsewhere? Consider other factors as well:

• Are you making those payments and carrying "bad" debt like credit cards at 15%?

• Are you finding it hard to put in enough in your 401k to even getrepparttar 112375 match your employer offers?

• Are you fundingrepparttar 112376 Roth IRA orrepparttar 112377 kids 529 college savings plan?

Negotiating Rates with Your Credit Card Company

Written by Claire Bowes


Ok, let’s face it, everybody hates high credit card rates, and they drain hard earned money out of your wallet. As a valued consumer, it is apparent that you learn how to negotiate to getrepparttar absolute best rate that you possibly can. The good news however is that it doesn’t have to be a difficult or time-consuming process. In fact, it can be very easy indeed if you know what you’re doing. In this article we will discussrepparttar 112338 ins and outs of credit card negotiating to ensure that you getrepparttar 112339 best possible rate withrepparttar 112340 least amount of effort.

1. First and foremost, you should figure out if you even want to continue using your current credit card company. Are you pleased withrepparttar 112341 overall service that you are receiving? Do you like their benefits? Ifrepparttar 112342 answer is yes then you can proceed. If not, you should stop reading this article and start looking for a better company.

2. Second, you should evaluate your paying history and make sure that it is positive before you call to negotiate. If it is positive then you have power and if it isn’t then you’ll be negotiating from a position of weakness and that might not be good. Instead, you should wait until it is more positive before you call them to negotiate rates.

3. Third, if you have a good history then remember this when you call. In essence, you’ll have extremely high negotiating power. The company needs your business in order to be successful and with clients they lose big time. Therefore, you should always display this “take them or leave them attitude” while conducting your negotiations.

4. Draft up a script and memorize it. It can be as simple as “Hello, my name is Bill and I have been a cardholder for X years and I consistently pay my bills on a time. Well recently I have been receiving all types of credit card offers from XYZ bank indicating that I qualify for an extremely low interest rate of X and am considering leaving you and going there if you can’t offer me a lower rate. Is this something that you can help me with?

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