Thank you again for all of your help. You always go above and beyond in your work and that’s what makes you not only a great lender, but a great friend too. We really appreciate all that you do for us!
Tracey and Elmer
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I Empower You to Borrow Smart
I have developed a unique process called "The Cash Flow Solution" which is intended
to help you see and understand the role a mortgage plays in a comprehensive financial
strategy. The Cash Flow Solution helps homeowners and aspiring homeowners
alike take the following critical factors into consideration whenever financing
Product - refers to the amount of time you want to guarantee the interest rate
that you pay to meet your current specific financing needs.
Selecting a loan product is really about risk management. It involves
estimating how long you will keep your house AND your current mortgage. Many Americans
have a fixed-rate mortgage that extends over a period of 15 years or longer, even
if they continue to move or refinance every 5 to 7 years.
Typically, the longer the lender guarantees the fixed portion of your loan product,
the higher the interest rate they charge. Thus, you could end up paying
for more risk protection than you actually need. The key is to select the product
that best suits your time frame.
Payment - refers to the approach you will take to repay your mortgage over time
that best fits your current specific financing needs. There are essentially
three ways to repay a mortgage loan; Amortizing, Interest-Only, and Negatively Amortizing.
An amortizing payment returns the interest due to the lender plus a portion of the
principal amount you borrowed and is a systematic transfer of your wealth from your
checking account to your house in the form of equity. An interest-only payment returns
only the interest due the lender with no transfer of your wealth inside the house.
A negatively amortizing payment allows you to pay less than the actual interest
owed and systematically reverses wealth outside your house through an increasing
mortgage balance. Your choice of payment option can have a big effect on your financial
Availability - refers to the maximum amount you would be qualified to borrow
for your mortgage. It is not the amount of money you should
borrow. Rather, it is the maximum amount you are allowed to borrow. Given that lending
guidelines often change, you will want to consult with a professional mortgage strategist
for your exact availability. You should consider how your profile as a borrower
might change over time and how this could affect your ability to borrow.
Amount - refers to how much you borrow when you refinance or purchase a house.
The amount you borrow may be either a function of simple necessity or a more complex
matter of opportunity. Your Amount is always limited by
your Availability. A debtor is someone who borrows solely out of necessity.
A debtor is dependent on a lender to provide the amount needed. When the lender
offers you an option to borrow more than you actually need, it presents an opportunity
for you to act as a creditor. You are still a debtor in the strict sense of the
word. However, you borrow out of choice rather than necessity to capitalize on a
financial opportunity. Your approach to Amount should look first at borrowing as
a necessity, and second at borrowing as an opportunity.
Management - refers to your ongoing strategy for borrowing smart.
The effective management of both your liabilities and your assets is imperative.
You need to determine who will do the managing, as well as when, where, and how.
When events trigger the need to review your current borrowing situation, those same
events often create other demands on your time that make it easy to avoid going
through this process. I recommend you plan an annual review
with your trusted advisor, a position for which I am applying, and set a date that
will be easy to remember each year, such as the anniversary date of your mortgage
or just after April 15th.
Protection - refers to the approach you will take to always maximize the safety
and liquidity of your equity, which is really your
wealth stored inside the house. Even after you have
paid off your mortgage the wealth inside your house can remain within your use and
control if you have an equity line of credit. I believe the equity line of credit
is the single most overlooked financial planning tool available today. I am not
recommending that you use your line of credit for anything in particular at this
point, merely that it be established to provide maximum flexibility and control
of your wealth.
Discipline - refers to your ability to stay the course. Discipline
is a state you achieve when you integrate what you know into your daily actions.
Hopefully, you have the discipline to create a plan to put into action the concepts
you learn. In doing so, you may form habits that help you approach borrowing as
a way to increase savings for future wealth. Committing
yourself to borrowing smart is like joining a health club: it is an important first
step, but the results also depend on you having the discipline to show up and work
I know that you don't want a mortgage.
What you want is a house. But to get it, in most cases, you must obtain a mortgage.
If you're like most folks you hate your mortgage and you'd love to get rid of it
as soon as possible. You grimace at every monthly payment and you know that over
30 years you'll pay more in interest than you paid to buy the house in the first
place. Your parents and grandparents taught you that you should never have a mortgage
and that the key to the American Dream is to own your house outright.
Although your parent's and grandparent's advice once made sense, today it may
be completely wrong.
There's almost no way you can avoid debt in today's society. Cars
and college and even big screen televisions virtually require you to borrow money.
And you'll find that mortgages offer you perhaps the cheapest way to borrow. Each of us wants to be debt free because we somehow equate
security with having no liabilities. Although paying off your mortgage
is not a bad idea, it might not be a good idea for you. There are many people
who are debt free but dead broke as well. The problem is that too many homeowners
focus on paying off the mortgage to the exclusion of all other financial objectives.
If you apply every extra dollar you have to your mortgage you may have nothing left
for other important financial priorities such as emergency savings, retirement savings,
college savings, life insurance, health insurance, disability insurance and long-term
Now that you have an idea of some of the things I do to help you borrow smart
of actual clients.
Borrow Smart Retire Rich
by Todd K. Ballenger
and Shawn R. Perkins
Click here to download the first three chapters of my book!
to request a FREE copy of our Strategic Homeowner magazine!