Mortgage Wisdom

Mortgage Planning: what should you really expect?

An increasing number of loan officers are putting the title of "Mortgage Planner" on their business card.  These loan officers are hoping to differentiate themselves from the people in the industry who merely fill in the blanks on a loan application and ask the client what flavor of mortgage they want.  However, if you are a Realtor or client and the loan officer you are dealing with professes to be a mortgage planner, what should you expect from that person?

As a veteran of the mortgage industry for over 12 years, I developed the leading financial analysis software in the mortgage industry - The Wealthbuilder Financial Analysis System, and I also am the author of the book Think BIG, Succeed BIG.  I studied accounting in college and have a 4-year degree from a major university; I was also Series 7 licensed for Fidelity Investments.  Furthermore, I study the financial markets throughout the day and I attend seminars and take other continuing education courses to try to be the best I can be for my clients and referral sources.  I say this so that you can understand where I am coming from relative to the elements I think a mortgage planner should have.

First of all, I think a Mortgage Planner should have a solid financial background either from a formal education or from working in related industries.  I believe it is important for a true Mortgage Planner to understand a wide variety of financial concepts and to be able to analyze various outside-the-box investment opportunities.

Secondly, I believe a Mortgage Planner should have a very good understanding of the various mortgages available that are designed to assist clients with their investment strategies such as the wide variety of Pay Option ARM mortgages.  You would be surprised how few loan officers truly understand this loan.

I also believe a Mortgage Planner should have a solid understanding of all the tax-related issues relative to mortgages and real estate such as acquisition indebtedness, 1031 exchanges, and the 2-in-5 rule for instance.

In addition to have this background and knowledge, a good Mortgage Planner should also have tools to help clients understand concepts, strategies and analyize their specific financial situation.  We have a PowerPoint presentation that we developed to help people understand a wide variety of concepts and strategies and, of course, we use The Wealthbuilder Financial Analysis System to help our clients gain a solid understanding of various types of mortgages including the Pay Option ARM and all of its variants as well as the client's financial picture as it relates to their retirement goals.

Finally, a good Mortgage Planner should have a team of financial professionals to help with the various aspects of a complete financial plan to give the client the best chance for success.  This team should consist of top people in their respective fields such as CPAs who have a strong understanding of real estate investing, estate planning attorneys who can assist with living trusts and LLCs, life insurance agents, financial planners (not necessarily those who sell stocks and mutual funds), and Realtors who understand real estate investment strategies and what makes a good investment property.

If you are dealing with a loan officer who professes to be a Mortgage Planner and they don't meet the criteria set forth above, I would question the integrity of their title and look for a true Mortgage Planner who does meet the above criteria.  We are licensed in 38 states and are working toward becoming 50-state licensed in the near future.  For more information and resources, feel free to check out www.TheWunderliTeam.com.  If you are a loan officer and are interested in learning more about The Wealthbuilder Financial Analysis System, go to www.mortgageloantools.com.

Think Outside the Financial Box

When you talk about investing, most people think of traditional investments such as stocks, bonds, and mutual funds.  While these all have their place, there is a whole world of opportunities available to those who spend the time to find investment alternatives that offer high rates of return (15% or more) with relative safety. 

Investing in real estate with the right kind of loan can provide a great return on investment along with safety.  Other types of investments to consider are real estate development projects, hard money lending, start-up businesses and franchises, and other opportunities that provide the potential for a high rate of return as well as a level of comfort that the investment will perform to your expectations.

It is important to research the opportunity at hand and consider all of the variables and how they may effect, positively or negatively, the outcome.  Be prepared to be in a given investment longer than what is promised; hence, if you are told the time frame is five years, be prepared for six or seven.  You should also consider the possibility that your initial investment may not be enough; management may ask for additional investment funds.  This isn't necessarily good or bad, just something you need to consider when contemplating various opportunities.

Investing in a wide variety of things that all provide a good opportunity for high returns is a great way to diversify; diversification by putting money in money markets, CDs, bonds, etc. is far too conservative to develop any substantial wealth along the lines of what will likely be needed for a comfortable retirement.  Warren Buffet advocates choosing investments that offer the potential for high returns and he stresses the importance of due diligence.  In other words, test drive the car before you buy it.

Perhaps the most important thing is to understand that there is no time like the present to start investing.  If you are already investing, you need to consider the very real possibility that what you are doing is probably not enough considering that at least 2/3s of Americans are underfunded for retirement.  With this in mind, you need to consider all of your options relative to where you can get more money to invest, and, once you have the money, what you will invest in.  Home equity is a great resource for many people if you access it properly and use it for investment purposes only (some debt consolidation may make sense).  Before you take the equity out of your home, you should know what you are going to do with it.  Finally, just knowing where to invest isn't enough; you need an exit strategy as well.

A good Mortgage Planner will be able to help you with all of these things.  Additionally, a Mortgage Planner can refer you to other financial professionals to make sure that your finances are handled properly from tax considerations to protection from liability to asset growth.

Adding value by adding to your clients bottom line

What does your client really know about managing money?  Do they understand about the Rule of 72 or the time-value of money?  For most people, social security is going to provide much of a quality of life for retirement.  Additionally, those who are investing in 401Ks and IRAs typically don't have a knowledge of how much they are going to have at their ideal retirement age or how much they are going to need.  Furthermore, they don't know what they are going to need in income.  Those of us who claim to be mortgage professionals have the advantage of seeing a client's complete financial picture and operate as their financial quarterback.  Read More.