A former client recently reached out to me for help. It seems he had lost my number and had gotten caught up in a refinance sales pitch from another company. “What could be so bad?” he thought. No out of pocket closing costs and a payment that, on the surface, seemed like it would save him money. But, within a year his principal balance had zoomed from $600,000 to $675,000! Read the rest of this entry

I recently read an article by a mortgage consultant advising home sellers against putting all the equity they gained from the sale into their next home. He emphatically suggested they stay more liquid, and make their money work harder in another investment vehicle.  As I recall, the word DIVERSIFY came up frequently…as did the phrase, FINANCIAL ADVISOR. His bottom line: “Borrow the biggest mortgage you can reasonably afford and put your other money to work elsewhere. Or, if you’re not selling, harvest your equity in with an Equity Repositioning Refinance…and put that money to work.”

PLEASE! I have 20-odd years of mortgage experience. But I would NEVER tell a client that. Having worked both sides of the market (Realtor® & mortgage broker), I know all too well what happens to amateur investors and people with too little equity in their homes. We all do. They’re dropping like flies out there right now.

The reality is, that man had a not-so-hidden agenda. He wanted all the refi money he could “reasonably” make. And the buyers who listened probably aren’t feeling too secure right about now. A heavy mortgage in this market is a killer. You wind up paying for the house several times over in interest. Your biggest asset can be easily lost if you get hit with a job loss or a heavy medical expense. And the stock market is a crapshoot if you don’t know what you’re doing.

My bottom line: be careful who you listen to. All too frequently mortgage “consultants” are interested in selling not consulting. And “financial advisors” are frequently securities pushers with a fat commission in sight.

Unlike the days of 100% financing with no income or asset verification, there’s no question loans are tougher to get these days. But they’re still available if you can document your income, down payment, closing costs and cash reserves. If you know what to watch for and know how to play the game. Read the rest of this entry