Image Block
Article
by Jeff Blovits is the owner of the Westerville based Prospera Mortgage Group, a mortgage franchise location of the publically traded ssb out of Texas. Jeff has been in the financial services industry for 12 years as bank manager, underwriter, and mortgage l

Don't ever, ever lose your job!

That's right, it's not your credit score or your assets or your equity or even Location, Location, Location that matter the most, it is whether or not you have an income stream capable of supporting your mortgage. Most people think of their home as the safest of investments that they have. It can be but only if you manage it correctly. If you have equity in your home, you are subject to the risk of loss of that equity at any time you can no longer afford to make your payments. It doesn't matter how many years you have paid perfectly, if you for some reason can't, the bank will not let you slide for a few months to be nice. As a matter of fact, the more equity you have the more attractive it is to them to foreclose on you. That to me is the exact opposite of a safe investment!

I counsel my clients to understand that the most important thing they want to maintain is liquidity. They want to have the access to enough cash or near cash reserves that they are in charge or their financial choices.

This may not seem like a revolutionary idea but I would argue it is something that a great many people do very poorly. My clients are above average as far as wealth in their socio-economic groups. They tend to have more wealth per average income or job position than their peers. And most if not all of them have less than 5% equity in their homes!

There are many factors that contribute to wealth and putting your home equity to work isn't the magic criterion that assures you will be wealthy. But consider why these people are positioned this way and maybe the connection will become clear. In addition to liquidity, other benefits include increased safety, rate of return, tax savings, elimination of non preferred debt and establishing an emergency side or reserve fund.

How does all of this relate to income? Consider that if you lose your income you lose the ability to get access to the equity in your home. And guess when most people need access to that money the most? You guessed it, when something unexpectedly affects their income stream, like a job loss. Lenders will make loans to someone with bad credit, with no assets or reserves and with limited time in a certain field of work but if you don't have the ability to pay them back when you lose your job, they generally don't want to lend you money!

I would be willing to wager that most of you have either been affected by corporate restructuring or know someone who has. There are also a substantial number of people who lose jobs either because they or someone in their family becomes ill or are injured. In those situations would you be better off with ,000 in an emergency fund to help you get back on your feet, pay doctor or home care bills, and allow you a cushion to find a good job instead of the first one you could find or have ,000 in equity in your house that you couldn't access?

Now to finish up on the wealth equation as it relates to home equity. One thing that most people don't understand is their home equity is earning them a 0% rate of return. There are 2 components to your home value: what it cost to purchase it (basis) and appreciation. In 5 years your house will be worth the same whether you have a mortgage or don't. Any money you choose to put into the house is simply a return of your investment.

If you are willing to rethink the wealth equation and put your home to work for you it can be a great source for turbo charging your wealth. If you coordinate that with an integrated financial plan involving your planner, accountant and insurance agent then the results can truly be outstanding!

For more info: www.rightwayunlimited.com or www.columbusmortgageloans.com

Jeff Blovits
Prospera Mortgage Group
Jeff@Columbusmortgageloans.com

About the Author

Jeff Blovits is the owner of the Westerville based Prospera Mortgage Group, a mortgage franchise location of the publically traded ssb out of Texas. Jeff has been in the financial services industry for 12 years as bank manager, underwriter, and mortgage lender. His innovative mortgage planning concepts are paving the way for countless clients to improve their financial lives.

http://www.aaarticles.com/article.php?id=844
Navigation
Article Snippet
  • WEALTH CREATION AND MORTGAGE PLANNING by Jeff Blovits, Franklin Bank
    by Jeff Blovits , Franklin Bank SSBp. 898-5656 copyright, Franklin Bank 2004http://www.Rightwayunlimited.com>for more click hereWhat if I were to tell you that almost everything you have been told about what to do with your home has been absolutely wrong and that one of the worst ways to build wealth is thr
    http://www.aaarticles.com/
  • by At a tiny 5'1", Kathryn A. Graham is a licensed private investigator, pilot, aircraft mechanic and handgun instructor in Texas. Also a prolific author, she has written numerous articles, short stories and a science fiction novel. http://www.kathrynagraham
    If you believe passionately in political correctness and cannot bear to see it used as a weapon in a war against the idiots who originated the whole politically correct idea, do please leave now. And you needn't return. Folks with no sense of humor give me a severe pain somewhere south of my belly button.I hold a concealed handgun license in the State of Texas. I am also licensed as a
    http://www.aaarticles.com/
  • by Dean Phillips is an Internet marketing expert, writer, publisher and entrepreneur. Questions? Comments? Dean can be reached at mailto: dean@lets-make-money.netVisit his website at: http://www.lets-make-money.net
    Thinking about starting a home business? Do you already own a home business but need cash? Perhaps you can qualify for a small business loan.However, before you attempt to borrow any money, you first have to figure out how much money you need. The easiest way to do this is by putting together a business plan. A good business plan is critical to your business success.
    http://www.aaarticles.com/
  • Will Your Asset Protection Strategy Survive The Final Judgment? by David Fordly
    Did you know that... we live in a lawsuit-crazy society? I'll bet you do know that. And I bet you also know that court judgments are getting more and more outrageous all the time. Unless you have some sort of asset protection strategy already set up, whatever assets you have built up can be wiped out from a lawsuit that does not go your way. Asset protection is a means for protecting your valua
    http://www.ideamarketers.com/
  • Finding Fulfillment at Midlife: The Second Chance Career by Diane Randall
    For more than twenty-years, Carla's primary focus was working her way up the corporate ladder in the Human Resources department of a large publicly traded company. Day after day she worked hard to meet the demands of her superiors and colleagues, until one morning she woke up with a sickened, sinking feeling in her stomach. It was her career, she realized. Having spent nearly half of her life
    http://www.ideamarketers.com/
  • Stop Debt Collectors Cold and get Back on Your Financial Feet by John Ventura, Gerri Detweiler
    As a consumer law attorney who counsels people with debt problems, I've heard my share of horror stories about debtcollectors. For example, a college student client was threatened that she'd be arrested if she did not pay a credit card debt, and another client was called 12 times in one day at work about a debt that was 14 years old. If they knew their rights, these people could have avoided
    http://www.aaarticles.com/
  • by Itna Yeknom is an independent author for core industry related websites.Credit Cards - Credit Check and Credit Score with Free Credit ReportDebt Consolidation - Debt Repair
    Preventing Identity TheftAlas, it's not possible to prevent identity theft and credit fraud entirely. However, by managing your personal information carefully, and with a full understanding of its importance, you can substantially reduce the likelihood that it will happen to you. The following tips show you how to prevent identity theft.One Step Up on Identity Thieves
    http://www.aaarticles.com/
  • by Sam Vaknin ( http://samvak.tripod.com ) is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He served as a columnist for Central Europe Review, PopMatters, and eBookWeb , and Bellaonline, and as a U
    Growing up in Israel in the 1960's, we were always urged to conserve precious water. Rainfall was rare and meager, the sun scorching, our only sweet water lake under constant threat by the Syrians. Israelis were being shot at hauling water cisterns or irrigating their parched fields. Water was a matter of life and death - literally.Drought often conspires with man-made disasters. Maced
    http://www.aaarticles.com/
  • Prevent Identity Theft by Itna Yeknom
    Preventing Identity TheftAlas, it's not possible to prevent identity theft and credit fraud entirely. However, by managing your personal information carefully, and with a full understanding of its importance, you can substantially reduce the likelihood that it will happen to you. The following tips show you how to prevent identity theft.One Step Up on Identity Thieves
    http://www.aaarticles.com/
  • 10 Key Questions Beginners Must Ask Before Playing an Online Casino by James Daniels
    Okay! You are a complete novice, you have never gambled at an online casino but due to the recent media hype, your interest has been peeked and you want to give it a go.Which casino should you play at? There are so many out there, that you really do not know which one is the right one for you. The prospect of becoming an online gambler excites you along with winning some serious money,
    http://www.ezinearticles.com/
Image Block