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Deizshel Setzer, Mortgage Planner/Wealth Builder

(LOCHEARN - May 15, 2008) - Homeowners today say the following: "I'm alright, I’m good, I’m fine and I do not need anything." We are in a recession.

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough.

Many of us have lost our jobs or have been notified that we will be losing our job.  Those of us who have jobs are working more hours finding that the dollars we earn are losing buying power as the price of food,  gasoline and the gas and electric drains us.  For many of us, it is a choice of who gets paid: the BGE bill or the mortgage

– the car note or the gas for the car - do we buy food or gas - pay for our medicine or pay the house note - pay our credit card bills or get the toilet paper and toothpaste?  The list is endless.

Are You Really Alright?

We are sitting back and doing nothing when we need to be acting now.  The property values in most Maryland areas are declining. The good news is that interest rates are at an all time low. The credit score for fixed rate FHA mortgage is only 580.  You could have been late on your mortgage in the past 12 months and as long as you are on time now and still employed or income qualified with equity.

Most of us are just stuck.  We fail to see the big picture.   A simple half of a point reduction in your mortgage interest rate saves you not just a hundred dollars per month but takes thousands off the final price of your home.  For example, consider a $200,000 home with a 30-year fixed rate at 6.5 % principal and interest payment amounts to $1264.14.  At the end of 30 years, the principal and interest paid equates to $455,088.98. The same $200,000 home with a 30 year fixed rate at 6.00% principal and interest payment amounts to $1199.10. At the end of 30 years, principal and interest equates to $431,676.38.

Between the 6.5% and 6.0% rate, a monthly savings of $65.04 every month, over 30 years equals $23,414.14 extra cash plus a savings of $23,412.60 in overall payment.  That translates into a total savings of $46,827.00.  Can you use the excess? A mere half point just put over $46,827.00 in your pocket. Saving more in your interest rate will pay you more.  Can you imagine saving 1%, 2% or more off the interest rate your paying now?  What will that do for you?

Lenders make money off of interest and they are happy that you are not interested in saving money short and long term.  They are delighted that you are doing nothing to take advantage of a lifetime opportunity.  I am not suggesting that you refinance to go buy the big screen; I am suggesting that you refinance to protect your equity, your future and your legacy.  I suggest that you refinance to save money and create and build wealth.  You need to extract the equity and place it into an interest bearing account or any stream of income generation including real estate, treasury bonds, Certificates of Deposits - to name a few.  Invest in any vehicle that will allow your money to work for you. Let’s get off of being stuck on stupid and start doing what makes financial sense, saves us lots of money, creates and build wealth. This opportunity is approaching expiration. Call me today at 1.866.905.1550.

– You can refinance today. 

Tags: housing, real estate