Out of debt!!

[bretdunlap]

I was once a mortgage broker
Here is the break down of a mortgage
Banks and brokers take your score, Income, assets, debt. They do a calculation they send the info to the lender than the lender replies with an interest rate.
A par- rate is where the broker makes nothing
Then on this quote there are incentives for the broker to make money
Lets say I get you a 6% rate (par) but If I tell you I could only get you 6.5 the bank will send me a check for say 1% times your loan amount. If I tell you I can could only get you 7% it might be 2%
In short a broker gets paid to put you in a worse position.

(all lenders do this some don't tell the employees like in a bank)

Second all banks charge fees they are junk fees about 500 to 800 bucks they say it is the cost of doing the loan.

Next you have to pay taxes on what you borrowed it is like purchasing an object. What you are purchasing now happens to be money. Assume closing costs over all will cost you 3% times the amount you are borrowing. (state and federal)

There argument will be, Look how much you will save by paying it off early HA lol why pay 3% or higher to send in a double payment each month. There next thing will be but look a the interest rate HA HA lol, but if you send it in your self the rate doesn't mater any way unless you stay making the 30 year payment. (math doesn't lie) Pay it off sooner than the 15 do it in 5 send every thing you got keep 6 months cash on hand for emergencies then pay it down.

Some experts say never pay off your house B.S. Pay it off the tax benefits only work if you wast money every year staying in a 30 or 15 year loan. CASH is king pay off the house then save and invest what you normally paid in a mortgage. You will do far better than the tax incentive plus you will realy reap the appreciation benefits.

And if your bank or broker tells you no closing costs what he or she did is give you a bad loan or a higher interest rate where he paid it out of his commission. But you got a higher rate witch in-turn cost you 10 xs the immediate benefit.

Secondly if you an enrapture cash flow is king by doing a 15 year loan forces you to make close to double your old payment. What happens if you have a bad month or slow cash you could get in a jam?

The best thing to do is take your worst month of debt from the past IE credit cards and use that money to pay off your house but it gives you the flexibility when you need it. The sooner you pay off your house the more money you save look at your old paper work there should be TIL (truth In Lending) page it should show you a the top what you borrowed and if you pay it off what the total is.

(N Hill {laws of success}: Self Disipline)

On average a 180 thousand house will cost you in the end close to 400 if you stick to the 30 year mortgage.

Accelerate your payments on your own pay as much as you can afford as soon as you can. You don't need a bank to hold your hand and make you pay it off sooner, and profit un necessary in that way.

It is a scam.

People see a lower interest rate and go crazy lol

[stevenmd]

Brutal honesty. I love it.

[bretdunlap]

Sorry if it sounded brutal I am not very good at expressing emotional inflection in my writing (sounds like I need to make a new affirmation)

Any way, I had a theory that people will pay to teach you instead of the other way around. So I became a broker to learn how to know my way around financing.

Honestly I was shocked to see the truth behind most 99.9999% of the industry. Personally I was a horrible broker in the commission sense most people needed a financial mentor not a mortgage broker. Most of my clients were shocked that I told them they didn't need to re finance.

I originally thought what a great way to help others to get into there homes.

Think of the movie The Boiler room and you will know the industry and the mentality of it. Gone are the days of your banker being part of the community and trying to help you get a loan.

[stevenmd]

No need to apologize as I was paying you a compliment. I only did commercial brokerage as business people knew you had to pay points to get the terms they wanted. I did one residential and that was for family.

[bretdunlap]

Cool
funny how they try to change the language to make it palatable like points or service fee or pay option arm. I think it goes back to Hill saying to be careful playing with the sub conscious that it knows no right and wroing "The subconscious mind will translate into reality a thought driven by fear just as readily as it will translate into reality a thought driven by courage or faith". To me that means your subconscious is as dumb as a computer and basically does what it is told. So for broker the language is changed to make it easier to sell for them selves, and it is changed to confuse and make more palatable for the client as well.

[Colorado Ron]

Great posts Bret! These are really apreciated! Thanks for the information. I can use this wisely in years to come.

[workwithjeremy]

Congratulations on being debt free that is a great accomplishment considering that many people will remain in debt for the duration of there lives just because they don't know any better. Debt free is the way to go in my opinion.

[Joetrevison]

You have to have money to get out of debt than a plan. Like pay high interest stuff off first.