We are taught to pay off a mortgage.
Is this really the best strategy?

What happens to the equity if we ever got sued?

What happens if you need to borrow some of this money during a time of emergency such as a Disability or Job Loss?

When you retire, can you access your money to live on without losing your house to a reverse mortgage?

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IF what you always thought to be true

turned out not to be true ...

When would you want to know???
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Take a moment to educate yourself by looking over the 10 STEP PROCESS by watching the video below...

FEATURES

• Liquidity
• Safety
• Rate of Return on Dead Equity
• Potential Tax Savings

BENEFITS

• Increase Cash Flow
• Build Wealth
• Asset Protection possibilities
• Estate Planning Efficiency

The Learning Process...

A - EDUCATE YOURSELF

• Watch the Doug Andrews (Video BELOW)
• Read the two recommended articles (ARTICLE #1 and ARTICLE #2)
• Watch the Equity Harvesting (Indepth Presentation)
• Understand Compound vs' Simple Interest (Sample #1 and Sample #2)

B - ANALYZE YOUR NUMBERS

• Review how the strategy works (SAMPLE)
• Discuss Fixed investment options (Principal Protected)

C - TAKE ACTION

• Get Pre-Approved on a home loan through HOME LOAN EXPRESS
• Review your exact numbers and how the plan would work
• Sign loan papers with lender
• Get funding from a lender
• Invest into Fixed investment strategies

D - REVIEW ANNUALLY

Doug Andrews VIDEO

WATCH THIS VIDEO FOR AN OVERVIEW

Is your house SAFE - LIQUID and offer you a RATE of RETURN?

Want to watch more VIDEOS
CLICK HERE

CLICK HERE for an indepth explaination from Roccy DEFrancesco

HOME EQUITY REPOSITIONING

ARTICLES BELOW

Take a moment and read the following two articles about
EQUITY REPOSITIONING.

After you have read them if you would like more information, then please call my office to set an appointment. Find out if such a wealth strategy could help you build wealth...

1 - HOW THE AFFLUENT MANAGE HOME EQUITY TO
SAFELY & CONSERVATIVELY BUILD WEALTH
CLICK HERE




2 - HOW TO SAFELY MANAGE HOME EQUITY TO
ACHIEVE FINANCIAL FREEDOM AND BUILD WEALTH
CLICK HERE





To arrange an appointment, please call the number below. Allow two to three weeks out in your calendar for us to accommodate you. There is no obligation for the 35 minute consultation.


For an appointment, please call (425) 280-9169
__________________________________________

Thanks,
Corbin Lindsey

LINDSEY FINANCIAL SERVICES
Phone: 425-280-9169
E-MAIL: corbin@lindseyadvisors.com
WEBSITE: http://www.lindseyadvisors.com/

INTEREST - COMPOUND vs. SIMPLE

DO YOU UNDERSTAND HOW INTEREST WORKS???

(Click on the chart Above for a closer look)

There are two basic types of interest

Compound and Simple. Weather you are paying interest on a debt or earning interest on an investment; knowing the difference can make a huge difference. Banks will normally offer CD's (Certificates of Deposit) using SIMPLE Interest and then offer Credit Cards using COMPOUND Interest. Does it really make a difference?

Compound interest is calculated by adding accumulated interest back to the principal, so that interest is earned on interest from that moment on.

Simple Interest is calculated only on the principal.

In short, you want to earn with COMPOUND INTEREST and you want to pay with SIMPLE INTEREST...

WHAT BANKS DO!!!

CAN YOU BE THE BANK???

COMPOUND is what they EARN
SIMPLE is what they PAY


Watch this overview...

Marc Cram, Certified Financial Planner explains in detail...

INTEREST RATE HISTORY

MORTGAGE ARM RESETS

Bad Economy?

How much longer?

This is going to take a while for us to overcome according to the level of existing ARM's that got us here in the first place...

A mortgage is simply a debt right?

Read on and let the following information about equity repositioning sink in. Please ask yourself the question; How much would you deposit in the following investment account?

• The customer determines the amount and length of time for monthly contributions to continue only once.
• The customer can pay more than the minimum monthly contribution, but not less.
• If the customer attempts to pay less, the financial institution keeps all of the previous contributions.
• The money deposited in the account is not safe from loss of principle.
• Each contribution made to the account results in less safety.
• The money in the account is not liquid.
• The money in the account earns a 0% rate of return.
• The customer’s income tax liability increases with each contribution.
• When the plan is fully funded, there is no income paid out.

If you haven’t guessed by now, this is your mortgage. It’s hard to believe that for years we’ve felt so secure about our equity and its safety, yet the truth is a far cry from the reality.

WHY PAY OFF YOUR MORTGAGE IN HALF THE TIME?

Most homeowners have the misconception that the wisest method to accelerate the pay-off of their home is to simply pay extra principle payments on their mortgages. Other homeowners are lured into thinking that bi-weekly mortgage payment plans are the answer. Still other homeowner’s utilize a 15 or 10 year mortgage amortization. In actuality, none of these methods usually proves to be the wisest method to accomplish “free and clear” home.

You can accumulate sufficient cash in a conservative tax-deferred mortgage acceleration plan to pay off a home just as soon or sooner than the utilization the methods described above. In addition you can accomplish your goal of paying off your home just as soon (typically in less than half the time) plus you will have the following advantages:

1) Maintain Flexibility, Liquidity, and Safety of Principle by allowing the equity to grow in a separate side fund where it is accessible in case of emergency, temporary disability, or unemployment.

2) Maximize the only real tax-deductible interest allowed by tax reform by keeping the loan balance as high as possible until you have the cash accumulated to pay off your home in a lump sum. In a typical tax bracket (25-35) you have the cash accumulated to pay off your home in a lump sum. In a typical tax bracket, you can actually pay off a $100,000 30 year mortgage in 14 years partially using $22,000 of Uncle Sam’s money instead of your own money as with the methods described above.

3) Maintain control of your home equity, increase its rate of return and keep the equity portable. Most homeowners relocate every seven years. Your home will likely sell much easier with a high mortgage balance rather than a low mortgage balance and your equity should always be kept highly liquid regardless of real estate market conditions.

Advice and proper management of home equity to increase liquidity, safety, rate of return and tax deductions is what every homeowner in America needs.

Common Myth: equity in your home provides safety. Well, equity does provide safety of course. The problem is, the safety it provides is for the lender, not for you. That is, as a homeowner I don’t want to lose my home if I cannot afford to make a mortgage payment. Therefore, I may believe that more equity, the lower the mortgage, and the lower the payment, the safer I am. Here is the flaw in that argument. Equity cannot make a mortgage payment, ever! Mortgage payments are made with cash, not equity.

On the other hand, if I am a bank, and you cannot make your mortgage payment, you have lots of equity parked in your home, and you can count on me (the bank) going after it. You see the irony here is that the safety the homeowner feels he or she has in their equity is actually safety for the lender in the event of foreclosure and it provides no safety for you. The more equity you have in your home the safer the lender and the less safe you are!

AVOID THE TRAP THAT ENSNARES MILLIONS OF AMERICANS!

Common Myth-conception: The best way to pay off a home early is to pay extra principle on your mortgage. Reality: No method of applying extra principle payments to your mortgage is the wisest or most cost-effective way of paying off your house.

Avoid expensive risks. Position yourself to act instead of react.

Common Myth-conception: Home equity is liquid. Reality: When you need it most, you may not have it. Home equity is usually non-liquid.

Real properties with high equity and low mortgages get foreclosed on the soonest and fastest.

Common myth-conception: Homes with a lot of equity are less subject to foreclosure. Reality: Homes with substantial equity are usually the first ones mortgage bankers foreclose on if their mortgages become delinquent. Lenders are very willing to work with people who have no equity in their home because the bank is in a position of losing money in the event of a foreclosure sale.
TRUTH: No matter where your property is located, the return on equity is always the same- ZERO!

Common Myth-conception: Home equity has a rate of return. Reality: Equity grows as a function of real estate appreciation and mortgage reduction; however, equity has no rate of return.

Mortgage interest-friend or foe?

Common Myth-conception: Mortgage interest is an expense that should be eliminated as soon as possible. Reality: Eliminating mortgage interest expense through traditional methods eliminates one of your best partners in accumulating wealth and financial security… Uncle Sam and his mortgage interest deduction.

Turbo charge your wealth growth rate!

Common Myth-conception: Borrowing funds at a particular interest rate, then investing them at the same or lower interest rate, holds no potential growth returns. Reality: You can earn a tremendous profit-regardless of the relative interest rates-by positioning your money in a tax-free interest-compounding investment that earns return greater than the real net cost of obtaining that money.

Increase your net worth by separating your home equity and putting those idle dollars to work.

Common Myth-conception: Equity in you home enhances your net worth. Reality: Equity in you home does not enhance your net worth at all. Separated from your home, however, it has the ability to dramatically enhance your net worth over time.

What is the IRS really saying?

Don’t lose out on thousands of dollars; understand what the IRS is actually saying!

Common Myth-conception: To avoid capital gains tax, you have to use as much as possible of the cash proceeds from the sale of a previous residence in purchasing a new home. Reality: Under the Taxpayer Relief Act of 1978, a married couple may exclude up to $500,000 (up to $250,000 if unmarried) of the gain on the sale of a principal residence. This exclusion can be used once every two years. Not one dime of equity from the former home needs to be put into the newer home to avoid taxation.

Pay No Money Down
Alleviate cash down payments when purchasing real estate

Common Myth-conception: You must always pay cash down when you purchase real property. Reality: There are many ways to purchase real property with out paying cash down.
House Rich, Cash Poor

Elderly homeowners can generate tax-free retirement income using a mortgage and a liquid, safe, side investment that the IRS treats differently than almost all other investments.
Common Myth conception: Financial security is, to a large degree, achieved when your home is paid for. Reality: Financial security is usually obtained with adequate liquid assets in a safe environment to cover any liabilities and generate positive cash flow to cover living expenses indefinitely.

Accumulating, Accessing, and Transferring Your Money Tax Free

Common Myth-conception: Life insurance is not a good place to accumulate and store cash, and is a poor investment. Reality: Modern cash-value life insurance can be designed to accumulate and store cash safely, provide tax-favored living benefits, and deliver tax-favored death benefits – all while safely maintaining liquidity and earning an attractive rate of return. Avoid believing old, outdated advice as truth for today.

Choose Investments That Generate the Most
Choose financial instruments that generate or provide the most money at the time in life you will likely need the money the most.

Common Myth-conception: Wise investors choose investments that accumulate the most money. Reality: When considering tax effects, greater growth investment vehicles may be inferior to other investments.

Choose investments that generate the highest net spend able income. Do you want more money in your pocket or better looking investments on paper?

Increasing Your Net Spendable Retirement Income

Proper home equity management, coupled with your retirement planning, could significantly increase your net spendable retirement income.

Common Myth-conception: Home equity cannot safely be used to supplement retirement income. Reality: Through careful planning, home equity can be properly used and managed (in a safe environment) to increase net spend able retirement income by as much as 40-50%!

For more information Equity Repositioning, please

Growth In Property Values

What do I do with all that equity?

by Michael Eastham, CPA CRMS

As house values continue to skyrocket, many of our clients have been asking us to help them evaluate the question: Should I be doing something with the equity in my home?This question has been the focal point of much media attention and the topic of several books. The question itself has as many different answers as there are individual risk profiles. Let me share with you a few of the options that exist. You can then begin to evaluate your situation to see which one fits your personal objectives.

Do nothing
The first and most obvious option is to do nothing. Not only is this the path of least resistance, but it is also probably the least risky. It involves no change while providing you with additional equity, as long as your home continues to increase in market value and you continue to pay down the principal balance of your mortgage. Many people choose this option by default because they believe in the “forced savings” concept--that your net worth increases without your having to think about it, and at the end of the day, you will have a benefit that you did not really anticipate.

A more aggressive approach
As a preface to the following options, let me offer two philosophies. First, I am opposed to the use of equity in your home to purchase consumable items such as cars, boats, etc. And while the “do nothing” option is good for some people, for others, it is preferable to access and manage the equity in one’s home in a more aggressive way, thereby conserving and maximizing liquidity, safety, rate of return, and tax deductions.Second, consider this thought as you evaluate the best use of your home’s equity: Houses are meant to house families, not cash!

Consolidation of debt
A second option is to use the equity in your home to consolidate non-preferred debt (this is debt that has no tax benefit attached to it). That involves converting non-preferred debt to preferred debt (this is debt that has some tax benefit attached to it, e.g., tax deductible interest or home mortgage interest). Please do not consider this a general statement advocating that homeowners should borrow on the additional equity, pay off credit cards and other consumer debt, only to accumulate more consumer debt. What we advocate is responsible equity management. And many times, the first step to achieving financial freedom is to reposition and restructure your existing debt.

Invest your equity
A third option is to reposition the equity in your home to take advantage of available investment opportunities. This does not mean to throw caution to the wind, but there are many ways to take advantage of the same concepts under which our banking system operates, a system that simply says, if you borrow at one rate, you need to invest at a rate that is equal to or higher than your net cost of borrowing. There are several ways that this can be accomplished in a very safe environment using investment vehicles such as tax-free municipal bonds, investment grade life insurance contracts and many others. Adding real estate investments to your portfolio can be another way that you can benefit tremendously from this equity repositioning. Keep in mind we want to earn Compounding interest (investing) and pay only Simple Interest (home loan). Be sure equity is invested in fixed not variable interest investments so that your principle will always be protected.

A final thought for consideration is that many people believe that the more equity they have in their home, the safer it is. As a result, they pour a substantial amount of money to paying off their mortgage as early as possible. I would submit that the two best ways to ensure security in your home are to either have the home completely paid off or have it mortgaged to the hilt. Anywhere in between leaves you quite vulnerable should the unexpected occur. The bank is much more likely to foreclose on a property that has a lot of equity than on one with a large mortgage on it. Besides, if you have a large mortgage on your home with the equity invested to an accumulated balance equal to or greater than the balance on your outstanding mortgage, isn’t the mortgage effectively paid off anyway? You have the money in a side account. The big difference is that you (not the bank) control the cash, allowing you to maintain the tax benefit for the life of the mortgage.

As you can see, there are many options available as you evaluate the growing equity in your home. Because great care needs to be employed when you consider using a mortgage as a financial planning tool, it is critical that you involve the collaborative efforts of a mortgage professional along with a financial planner, CPA and possibly an estate attorney before you implement any of these strategies. However if you do, you can experience a dramatic increase in your personal wealth over time.