Issues and Trends,
our monthly newsletter about Western Colorado Real Estate.
WELCOME TO 2007! With the New Year’s resolutions and setting goals, remember it’s never too late to start on a big dream as evidence by these “late bloomers”.
Ray Kroc bought his first McDonalds at age 52
Sam Walton started Wal-Mart at age 44
Charles Merrill started his brokerage business (Merrill Lynch) at age 54
Col. Harland Sanders began franchising KFC at age 65
Dom Perignon created his Champagne at age 60
William Mayo founded the Mayo Clinic at age 70
Did you know that a large part of financial independence begins with owning your own home? Each year people make resolutions for one thing or another, but often times a resolution includes better financial decisions. This may be to buy a home for the first time, buy an investment property or just to refinance and reposition your income. The outlook on traditional mortgages is changing for investment savvy homeowners looking to better manage their cash flow by carrying a larger mortgage for an extended period of time.
Lenders say:
- Mortgages don’t lower home values – your home will grow in value whether you have a mortgage or not. Generally, loan values decrease while home values increase, creating substantial wealth.
- Your mortgage is the cheapest money you’ll ever buy - most people need to borrow money during their lives, so why pay 18% on credit cards, when you can borrow at a much lower rate.
- Your mortgage is the best way to lower your taxes – personal loans are not likely to be tax-deductible, but for most people, interest you pay on mortgage loans are fully deductible making the already cheapest loan you can get even cheaper.
- Get cash out of your house why you can – the main reason people turn to borrowing is because they don’t have the liquid cash. Secure a home equity line of credit and then if you suffer a job loss, illness, or other financial crisis you will be prepared with funds available.
- Mortgages becomes even cheaper over time – if you choose a fixed rate loan, your payment never rises, but your income likely will; thus today’s loan payment becomes easier to pay over time.
- Equity in your home has no rate of return – your equity only grows based on reducing the mortgage or by appreciation of value. If you reposition that equity growth into safe side funds that will compound with interest growth, you can create a wealth faster.
REMEMBER THE IMPORTANCE OF YOUR CREDIT SCORE!
Your credit score is used for determining what interest rates you will pay what insurance rates you will pay, and even whether or not you will be hired for a job. Your credit score is different from your credit report and is compiled by three major agencies, Experian, Equifax, and TransUnion, based on information provided by creditors. Most scores area based on a formula developed by Fair Isaac, a research firm, and are often referred to as FICO scores. If you’re FICO score is below 600, you can expect to pay above-average interest rates on a loan, if you can get one at all. Borrowers with scores above 700 usually qualify for relatively low rates. If your score is above 760, you probably qualify for the lowest rates. Here are some facts you may want to know about your credit score:
- 52% of Americans incorrectly believe that a married couple has a combined credit score. Each has their own. You can’t improve your score by marrying someone with a 780.
- Earning more money will not improve your score. Paying your bills on time is the key.
- About 40% of consumers don’t realize they can raise their score by paying off a large balance on a credit card. Nearly 28% mistakenly believe they can improve their score by maxing out their credit cards. Those who max out their cards are considered riskier and have lower scores.
NOW is the time to invest in real estate, weather it is a first time home purchase, upgrade, or 2nd home investment. Then, let your investment go to work for you as you achieve your New Year’s resolution by accumulating wealth and restructuring your finances. Let Colorado Heritage Real Estate, Inc. Brokers assist you with all your real estate needs.