Wealth Planning Starts With Your Mortgage

Wealth Planning

If I have had the pleasure of helping you, you've heard me use the phrase, "We're going to play chess while the world plays checkers.".  What that means is that we are going to create and execute a strategic plan for you to use the correct mortgage to accumulate wealth.  We create that plan so that your wealth is created within the property and outside of the property.

READ:  Wealth Planning?  From a Mortgage Salesman?

So here is the five-step process I use before we start talking about rates and terms.  If you've ever bought a home, this is going to be dramatically different then what you've heard from the retail mortgage salesperson that originated your last loan.

Step One:  Goal Setting

This is where I'll ask you definitive questions about how you want your life to look in the future.  It's been my experience as a wealth planner that most people are concerned about two things:  sending their children to college and making sure that they won't outlive their money when they retire.  If I ask you things like "Do you think your seven year old is smart enough to go to college?", I'm not trying to be a smart-aleck; I'm determining if  we can expect a $100,000 expense in 11 years.  When I ask you to "paint a picture" of what you'll do each day when you stop working, I'm trying to determine how much monthly income you'll need when you retire.

Step Two:  Working the Numbers

This step is where I retreat and figure some programs.  So many of you are sitting on a small fortune in Long Beach real estate but you have very little money "outside of the property".  You're not liquid.  Lose your job it may be as soon as four months for trouble to hit.  I look at your current assets, extrapolate the future value of those assets and see if it will be enough to reach your goals.

Step Three:  The Recommendations

I'll give you a laundry list of actionable items. including the home loan.  This is where it gets hairy.  You'll be breaking some of the bad thinking we've been subject to growing up so it won't feel right.  I may be recommending that you pull out all of your equity on an adjustable rate loan which may be exactly what you were taught NOT to do.  I assure you that I'll have requisite recommendations with referrals to top financial advisors for that money.  Here is where I'll ask you to keep an open mind and ask lots of questions.

Step Four:  The Execution

I'll get working on the loan.  I'll get you scheduled with a financial advisor for the investments, we may be having you sit down with a CPA for the first time, and you might have get into Laurie's car and hunt for an investment property.  It's going to feel very uncomfortable here, too.  You may not be used to dealing with a "financial advisory team". I assure you that the wealthiest Americans use this "team" strategy.  If you want to build wealth, act like a wealthy person.

Step Five:  The Review

We do this review on the telephone every 4-6 months.  It's a "checking in" call that lasts 15-30 minutes.  I'll also act that you make me aware of any major life changes you have when they occur.  Annually, we'll go through the process again, starting at step one and repeating the other three steps.

This is a radically different approach than the traditional retail mortgage salesperson.  I know that.  I decided a while back that my skill sets were best suited for financial planning.  I learned that it was most impacting in the mortgage industry.

I'm unique...but so are you.  You deserve special attention.

Posted on June 23, 2007 18:14:34 by Brian.Brady

Uh, Oh! Im in BIG Trouble

Long Beach Home Loans

Notice Of Default - NOD

If you receive a notice of default (NOD) for your mortgage, you need to act quickly.   A NOD is a notification given if you have not made payments by the predetermined deadline (usually specified in your Deed of Trust).  It spells out repayment  (sometimes called curing) schedules and outlines  the foreclosure process and timeline.

You have until five business days before the foreclosure sale to cure the default. To cure the default you have to pay off missed payments, late charges, and fees for initiating the foreclosure. If you do not cure the default, the trustee can take steps to hold a foreclosure sale.

Steps to take if you receive a NOD:

 

1)  See if you agree with the amount the trustee says is due. If you do not believe you owe the amount claimed, write a letter as soon as possible disputing the amount, with copies of the proof of payments. 

2) If you owe the money, and have equity in your home, contact us immediately.  We have private investors who may lend you up to 70% of the value of your home. Most banks or mortgage companies will not lend you money once a NOD is filed.

3)  You might consider a 'work out agreement' .A lender may give you more time if you have a definite plan for repayment. If the lender agrees to give you more time to repay the loan, that agreement should be in writing. These agreements are commonly known as work out agreements.

4) If you can not get a loan or secure a work out agreement, you should consider selling your home before you lose it in foreclosure. Selling the home may allow you to save your equity and protect your credit. This may help you in relocating to a new home.

Bankruptcy may not save your home.  It may delay the foreclosure process but the lender has certain rights as defined in your Deed of Trust.  If you contact an attorney, they usually offer bankruptcy as an alternative.
 
'Foreclosure Specialists' often contact homeowners who have received a notice of default. They may claim they can prevent the foreclosure, and may even suggest that you transfer title to your home to them. Be wary of these buy/leaseback agreements.

Other Articles:

HARD MONEY:  What the heck is that?

HARD MONEY:  Apartment Loans

HARD MONEY:  7 Tips for Borrowers

Posted on June 16, 2007 04:30:02 by Brian.Brady

Long Beach Home Purchase - Financing Rip-Offs To Avoid

Long Beach Homes, Realtors...

... and Lenders Oh My!

As a Long Beach Realtor many buyers contact me in need of other services.  We Realtors generally have a group of vendors that have become valuable team members.  Vendors who have proven themselves over the years to provide great customer service and care for our clients. 

The sub-prime problems have really shaken up the industry and have changed not just the way loans are approved but relationships between Realtors and their preferred lenders. 

Recently I sent a buyer to a local Long Beach Lender, who we have used occasionally on and off for several years.  The client needed credit cleaning so they would be in the lenders hands until such time as they were ready to begin their house hunt - about 2 months was estimated.  I made a follow-up call to the lender, about 5 weeks into the 2 months, to check on their progress and asked "How are things going with Mary and John?"  He replied "Who?".  I was stunned!  He quickly remembered who I was referring to and then told me that the credit cleaner had some personal issues and it didn't work out.  HUH?  No calls to me and my buyers were left unattended.  The lender apparently didn't understand the level of trust that was placed in his hands. 

He called the buyers, brought them into his office for a 3 hour meeting and arranged a loan for them, then called me to let me know what he had done and the terms of the loan.  He complained about a collection on Johns credit for $130 and one on Mary's for $30.  Both were items in dispute that they did not owe, minor junk that should not have mattered.  As a result he quoted them an additional 2% interest on both the first and second, jacked their fees up to over $14,000 plus a $6500 origination fee and told both the buyers and myself this was the best they could hope for.  When I asked him if he was actually going to be able to close this loan he said "I hope so?".  Well folks, that is just no-where near good enough for me or my clients. He is soooooo fired!  I call this kind of work shlock and there is no place for it in my business, not now, not ever!

Mary and John came to my office the next day.  We spent the entire day together.  They called Brian Brady, Americas Most Opinionated Mortgage Broker who laid out a very do-able financial plan for them.  They were treated with respect, loans were arranged for them-at very reasonable interest rates, pre-penalty's were done away with, a financial plan was put into place for the buyers to re-finance both loans in 6 months and make their dream of owning a Long Beach Home come true, without getting raped financially.   (There is enough equity in this Long Beach property to allow this strategy.)

Mary and John opened escrow yesterday on a Long Beach Home that they are ever so excited about. 

Brian provided us with a loan-commitment letter immediately.  For those of you who are unfamiliar with this term let me explain this in simple terms.  Unlike the run of the mill loan brokers, Brian is a Direct Lender.  That means that the actual lenders trust him so much they have given him the power to approve the loan, based on their guidelines, himself.  Brian is the end of the line.  If Brian says you are approved, you are approved!

I would like to explain the value of a Loan Commitment letter (or lock-in letter).

• It tells the buyers they definately have the loan that was quoted to them and provides them with security and negotiating power. 
• It tells the buyers agent that the loan will close and their work will not be in vain.  In todays market this equates to negotiating power folks and I just love to negotiate. 
• It tells the seller that they have a secure escrow that will close without any loan problems, worth giving up a few dollars for, especially if you have fallen out of escrow once or twice already. 
• It tells the listing agent that they are dealing with professionals and a secure transaction.  A smart listing agent will advise their seller that this is a 'best possible scenario' situation and worth giving a bit for. 
• It provides a transaction in which everybody WINS. 

Any lender who cannot provide you with a LOAN COMMITMENT LETTER within a couple of days, has not secured the loan on your behalf.  No matter what they are telling you!

This is the reason so many Long Beach Homes are falling out of escrow.  Agents do not know enough about the loan process to demand lock-in letters, or loan commitment letters from the buyers lender. 

Listen closely Buyers:  If you have a loan commitment letter, you do not have to worry about being Baited and Switched.

Bait and Switched, hmmmm, how does that happen?  Well a realistic lender quotes you a rate that makes you gasp for air.  Your FICO is not great but it's OK, you have had some late payments, your salary is OK but not really outstanding, and you want a better rate, so off you go shopping. 

Be careful they are waiting for you. 

You speak with several lenders who assure you that the big bad OTHER LENDER was just ripping you off, but they can get you such a deal:"  ("Do you know that old saying?  If it sounds too good to be true.... it probably is.") So you go ahead and sign on for the lower rate.  Don't feel bad, a lot of other people have fallen into this same trap.  These lenders are charismatic and convincing.  But they do not provide you with a LOAN COMMITMENT LETTER, because they cannot, they have not secured the loan. 

A couple of weeks into your escrow the big bad lender calls the poor little buyer and states "You know that loan I mentioned (no commitment words being minced here) well that program has been discontinued, but I have this other program that is a good fit and will only cost you a tiny bit more in interest.  He never mentions the fee schedule for this loan and you don't know to ask.  When it comes time to sign your loan documents, the lender is nowhere to be found, the fees are double what you were originally quoted, the lender will not answer his phone, neither will his manager and you are faced with a nightmare decision to make.  Either pay the undisclosed outrageous fees, or back out of the escrow within days of closing, possibly losing your good faith deposit, maybe the seller will extend the escrow a month so you can try to secure another loan?  Never a good situation to be in.  

• Protect yourself.
• Hire a great Realtor.
• Hire a great Lender.
• Demand a Loan Commitment Letter.
• If you don't get one - RUN!
• Go find your home with secured financing.

***Clients names are fictitious, but you know who you are.

Long Beach Home Seller Tips:

• Seller Tips - Choosing Your Long Beach Realtor
• Seller Tips - Preparing Your Long Beach Home For Sale
• Selling Your Long Beach California Home? Its A Whole New Game!
• E-MARKETING Getting "OUT OF THE BOX" to sell your Long Beach CA Real Estate!

Long Beach Home Buyer Tips:

• Home Buyer Tips - Don't Make Any Major Purchases
• Home Buyers Tips - Changing Jobs Affects Your Ability to Purchase a Home
• Home Buyer Tips - Things to Avoid Before Purchasing a Home

Home Loan Tips:

• Loving Your Home Loan
• How To Find Your Way Through The Home Loan Jungle - Part Two
• How To Find Your Way Through The Home Loan Jungle - Part One
• How To Get The Best Home Loan - Neatness Counts When You Want a Home Loan

Posted on May 18, 2007 12:38:44 by Laurie.Manny

Move Your ASS-ets Long Beach: Depression Economics

Many Long Beach homeowners are suffering from an insidious disease called Grandpa Economics.  Actually, so are many Californians.  I suppose most of the country suffers from this affliction. 

Grandpa Economics or Depression Economics starts off with the theory that you go to school, study hard, get a good job, save up money, buy a home and pay it off, save more money, retire, and live debt-free on a pension and/or social security.  That was a great plan for our grandparents.  They are often referred to as "The Greatest Generation" and I don't wish to take away from their many accomplishments.  They lived through the Depression, fought the war, built the roads and ports in our state, and were the backbone of our country.  These children of the Depression put Long Beach on the national map!

So why would I suggest that this thinking is wrong for the middle class of the new millennium?

The rules are entirely different today.  You see, the federal government, under the leadership of President Roosevelt, moved towards a paternalistic economy.  When the veterans came home from Japan and Europe in the 40s, the US government provided them with a free education under the GI Bill.  The country was beginning an arms race with the Soviets that required massive government investment in the defense industry.  President Eisenhower coined the phrase "Military Industrial Complex" and warned us of our reliance on it.  Skilled work in Southern California was a plenty during the 50s, 60s, and 70s.  The employers mirrored the paternalistic nature of the government and provided good paying jobs with fantastic benefits.

So powerful was the influence of Depression Economics that  "The Greatest Generation" passed along that thinking to their children, "The Baby Boomers".  If you are a Boomer (or an older Gen Xer), you might remember these sayings:

• "Take all you want but eat all you take"
  
• "Shut the light!  Whaddayouthink?  I'm buying stock in Southern California Edison?"
  
• "Watch the pennies and the dollars will take care of themselves"

What are some of things we've done in the past 15 years that exhibit Depression Economics?  Have you refinanced your home from a 30 year mortgage to a 15 year fixed-rate loan?  Did you set yourself up on a bi-weekly payment program for your home loan?  Have you left tens of thousands of dollars in your savings account at the bank, earning a paltry 3% because of the "safety" of an FDIC-insured institution?  If you've answered yes, to any of these questions, Depression Economics has had an influence on you

The rules changed in the early 70s and then again in the new millennium.  In fact, economic rules change about every 25-30 years so don't feel too bad about it.  The effects of our upbringing influence our habits towards money and investing throughout our lives.

In this series, Move Your ASS-ets, Long Beach,  I'm going to outline these changes in our economy and make suggestions about how you can position yourself for success in retirement.  HINT:  It ain't by following Depression Economics.

Part Two:      Boomer Economics

Part Three:   Millennial Economics

Part Four:     The Worst Investment and You Probably Own It

Part Five:       A Strategic Solution For Financial Freedom

Part Six:         Recommendations For Action

Posted on May 16, 2007 20:48:11 by Brian.Brady

Landlords Win in the Sub Prime Implosion

The recent events in the sub-prime market have raised the bar on obtaining financing.  Buyers are most likely  going to have to cough up a few bucks to buy anything, unless they have great credit scores and history.  This is great news for Long Beach landlords.  You are not going to have any problems filling up those vacant Long Beach units.  We may actually have housing shortages in some areas. 

It is natural that tenants become first time home-buyers.  Not right now folks!  Unless they have a decent down payment, its just not going to happen, equating to long term tenants.  With so many foreclosures on the horizon, the displaced owners will require housing, increasing rental housing demands. 

Supply and Demand

When supply is down, demand is up.  Rents are going to begin to increase with the demand for available housing.  Who knows, maybe the rents will actually begin to justify the absurd recent prices on some of the investment properties recently and currently on the market.  It may not be a bad time to look into purchasing a reasonably priced Long Beach Investment Property, if you can find one.

The recent re-development in Downtown Long Beach has created a lot of available but not so affordable housing.  Lets face it folks, if these people cant afford to buy, or are coming out of a foreclosure, they are looking for rentals they can afford.  With more high rise development on the way it raises the question, where is the affordable housing? 

In Downtown Long Beach, affordable rental housing can be found in the Willmore City Historic District and in the East Village Arts District.  Alamitos Beach is still affordable but gets a little pricier, rentals in Belmont Heights and other Long Beach CA Beach Communities have stayed surprisingly reasonable.  The Circle area, Bixby Knolls, California Heights, Wrigley Heights, North Long Beach, Lakewood, Signal Hill and Signal Hill neighborhoods are likely contenders for housing the coming demand.  If you have been contemplating the purchase of Long Beach Income Property, now might be a good time to think about putting that plan into action. 

If you currently own Long Beach units and have been contemplating upgrading them, now is the time.  Upgraded rental units command higher rents and are always in demand. 

Do you have Long Beach Income Property that you would like to sell?  Are your rents anywhere near todays current market?  If not you might want to consider restructuring your business plan and raising your rental income to support your asking price.  Income property sells based on GRM (Gross Rent Multiplier).  In plain English, your rents must support your selling price or your buyer will not be granted a loan.  Sure, you can wait for a buyer with a lot of cash, but you are going to wait a long time.  A buyer with a lot of cash is most likely going to split that cash up and buy multiple units.  If you price your Long Beach property to sell, and your rents support your price, you should be able to sell. 

I am highly experienced in the purchase and sale of Long Beach Income Properties.  Please call if you need any assistance or advice. 

Posted on March 18, 2007 17:46:47 by Laurie.Manny