Debt Management is Key to Wealth

Financial planners and stock brokers play an important role in helping individuals manage their assets. Many are truly experts at showing you how to “grow your money”. However, their ability to help you create long-term wealth can be thwarted if they do not work with experts in “debt management”.

Over the years, I have established working relationships with many such money managers because mortgage bankers fill a “debt manager” role that is critical to successful long-term financial planning. By working in concert with financial planners, mortgage experts can help them to better grow your wealth. Whether you need to develop income from your home’s equity, or reduce your monthly mortgage payments to preserve your cash flow, a good mortgage loan officer can help you select the right “debt instrument” to best develop your asset base.

Doctors Thomas Stanley and William Danko co-authored the best-seller, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy. Their book confirmed my notion that America’s wealthiest people do not create their wealth by focusing exclusively on assets and income. To the contrary, most millionaires attribute their financial success primarily to their ability to properly manage their debts.

Large debts like your home mortgage can cause a strain on your cash flow that can profoundly affect your financial foundation. With proper coaching and teamwork, families can learn to properly engineer their debts into a successful financial plan.

Some of the more popular mortgage products and loan combinations that I have used in recent years include flex-payment mortgages, piggyback loans, no-cost adjustable-rate mortgages, discounted fixed-rate mortgages, and bi-weekly payment strategies. Like skilled craftsmen or medical surgeons, mortgage professionals mastermind the correct mortgage strategies for each borrower’s unique situation. One size does not fit all.

Do not wait until the mortgage market is insanely busy to establish a working relationship with your loan officer. You should get to feel as comfortable phoning him with scenarios and questions as you would any other professional whose services you employ. Like other service professionals, great mortgage advice can have a huge impact on your life and your lifestyle.

++ Republished as a courtesy of Phillips International LLC.  Readers may contact a mortgage professional at www.PhillipsHQ.com/mortgage.

Buying Homes with Bruised Credit

Buying Homes with Bruised Credit

We all know somebody who has been through rough times. Businesses fail, marriages fall apart, and people get laid off. Sometimes affected individuals can hold themselves together financially, sometimes not. When life’s challenges cause people to juggle bills and miss payments, they often end up with bruised credit.

Some potential homebuyers wrongfully assume that they are doomed to a lifetime of renting because of their blemished or bruised credit record. This notion is often false. Many of these borrowers have compensating factors that may allow them to still purchase a home even in the wake of financial maelstrom.

Recent bankruptcies or current collections do not automatically disqualify borrowers from getting mortgages. Mortgage lenders in these “non-conforming” scenarios will usually grant mortgages if the borrowers have a minimum credit score, if they have one or more “good-scored” credit references, and if they can put a meaningful down payment toward their home purchase.

Depending on the type of mortgage, it often helps for borrowers to write a letter to the mortgage underwriter explaining the situation that caused their financial problems. Some of my recent clients have legitimately cited the death of a sibling, the loss of a primary breadwinner, and long-term hospitalization. In each of these cases, we were able to provide the loan underwriter documentation validating the claim.

In most cases, lenders primarily want to know how you have handled your credit since your financial struggles. If you exhibit the same pattern of behavior that led to your earlier financial problems, you will likely have trouble getting a mortgage. Conversely, if you bounced back and maintained excellent credit since your setback, you may have a good shot at a mortgage.

If you have been denied credit for any reason, you may get free copies of your credit report from each of the three major credit repositories: (800)685-5000 (Equifax), (800)888-4213 (Transunion), or (888)397-3742 (Experian).

Remember, a skilled mortgage professional can usually find financing for borrowers if the borrowers are truly motivated. It takes hard work, creativity, and patience—but often these borrowers are usually very happy with the result: a home of their own.

++ Republished as a courtesy of Phillips International LLC.  Readers may contact a mortgage professional at www.PhillipsHQ.com/mortgage.