Mortgage Management . . . It's a Process

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  Most of us think of our home mortgage as a means-to-the-end, meaning that we wanted to own a home and, to do so, needed the mortgage to make that possible. Then, the management of that mortgage was handled by chance or happenstance. Yes, we all try to make our payments in a timely manner and we listen for the lowering of interest rates so that we don’t miss that opportunity. But that’s it. Most of us do little more.

I’m here to tell you that our home financing and how we manage that portion of our finances is ever bit as critical to financial success. Home Mortgage Management is vital to good personal financial success.

Simply put, Home Mortgage Management is the process of:

1. Identifying your current financial status– Is your monthly cash flow sufficient? Do you have too much credit card debt? Is your credit score less than where it should be? Do you have the ability to meet all present and future obligations?

2. Reviewing your current mortgage(s) status– Knowing what to change requires knowing exactly Where you’re at! What are the current terms of your home loan? Do you have more than one mortgage? Are you paying mortgage insurance? Is ALL your home mortgage interest tax deductible?

3. Creating/discussing your own financial goals– Have you thought about your personal finances? Is your current financial status aligned with your goals? Are you and your significant other on the same page? Do you meet regularly with a financial planner to discuss your finances?

4. Utilize your home mortgage as a great financial tool -  If used properly, your home mortgage can assist you in aligning your current financial status with your personal financial goals. Knowledge of all aspects of home mortgages is difficult to grasp. That’s why I’m here. Allow me to assist you (utilizing my 32 years of experience in mortgage financing) in creating a plan to make it happen.

Creating Personal Financial Goals - Good questions to ask yourself and/or discuss with your significant other:

• Should      you use the services of a CFP (certified financial planner)? 
• Do you      currently have a plan for your home mortgage?
• How is your credit score and how might      that effect your home financing AND what would it take to improve it?
• How is      your cash flow?
• Do you      consider future financial obligations, and do you have a plan to deal with      them?
• How would      you categorize your debt load? Low, medium or high? Do you have a plan to      manage it?
• Mortgage Insurance – If you currently      have it, do you have a plan to get rid of it?
• Is saving      important to you?
• At this      point in your life, which is more important to you: Your interest rate?      Monthly payment? Security?
• How long      do you plan on keeping your current home? An upcoming home sale represents an opportunity to earn revenue?
• What will      you do when you sell it?
• Would you      like to be able to pay off your mortgage early, without having to have a      huge monthly payment or without increasing your payment at all?
• Do you talk about money with your      family?
• What keeps you up at night?

Wow! That last one is a powerful question. Before creating a plan on how best to proceed, these are important factors to consider.

Two parts to managing your home mortgage:

In order for a consumer to properly manage their home mortgage, there are two important steps. First, you need to know where you’re at! I call these the loan metrics. Most often, some of this information can be found on your monthly mortgage statement. Other parts require a little more digging. Finally, a few require proprietary services you may not have access to.

Loan Metrics to Analyze

Mortgage related:

1. Credit Score

2. MI (mortgage Insurance) monthly and up front or lender paid.

3. LTV / CLTV – 1st & 2ndmortgage 

4. DTI

5. How long will you remain in your current home? Will you be selling or paying it off in 3 to 5 years?

6. Term (Original length of you home loan and how many years remaining)

7. Home Value

8. Interest Rate

9. Loan program

The second part is having access to real time, critical information. The mortgage industry and the “rules”, we call guidelines, are constantly changing. Interest rates change by the minute. Here is where we shine. Once we know what is important to you (your goals), we analyze all the changing metrics of your individual scenario and realign them with your goals to determine if there is a Window of Opportunity from which you could benefit. As highly experienced mortgage loan consultants, we know every aspect of the mortgage industry and are constantly vigilant for these Windows of Opportunity. These are specific times when the mortgage markets present you with significant benefit, sometimes for a very limited period of time. Some might think of this as “All the stars and planets in alignment”.