Category: Financial Planning

Millionaire Tells Millennials To Buy A Home

CNN recently ran an article explaining why self-made millionaire David Bach has said,

“The fact is, you aren’t really in the game of building wealth until you own some real estate.”

In his book, “The Automatic Millionaire” Bach writes,

“As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!“

We have touched on this in the past. (see Buying Still Cheaper Than Renting, Renting vs Buying a Home and Accumulating Wealth, and Homeowner Average Net Worth 3,600% Higher Than Renter)

Bach has told CNBC that buying a home is “an escalator to wealth“.

“If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”

In regards to the idea of a starter home, Bach says,

“Oftentimes, buying your first home means you’re not buying your dream home. You’re just getting into the market.”

The Logic

Following David Bach’s logic is simple. We all have to live somewhere. We have to pay either rent or a mortgage. Over time, a mortgage can increase your net wealth over renting.

While buying your dream home would be nice, Bach says that the key is to just get into the market, and admits that your first home may not be your last.

The Takeaway

On average, family wealth of homeowners is dramatically higher than that of renters, and this divide has seen growth over time. David Bach, best-selling author and self-made millionaire, advises homeownership as the surest path to building wealth.

Call or contact me today! Contact your Benchmark mortgage lender today. Find Your Branch here: Get Started Now!

Homeowner Average Net Worth 3,600% Higher Than Renter

by I Am Benchmark

Not only has the housing market made a strong economic recovery, but also in consumer and expert confidence in home-ownership as an investment.

Not Because of a Difference in Lifestyle

In the New York Times, an editorial entitled, “Homeownership and Wealth Creation” explains:

“Homeownership long has been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth.”

The Federal Reserve’s Own Research Agrees

While we have referenced this article before, many of the claims that the article makes are backed by the research that the Federal Reserve has conducted in their Survey of Consumer Finances. The study found that,

the average net worth of a homeowner ($194,500)
is 36x greater than that of a renter ($5,400).

The National Association of Realtors (NAR) expanded on the Federal Reserve’s research and projected that,

by the end of 2015, the average homeowner will have nearly
41x the net worth of a renter.

That’s nearly 4,100%!

The Gap Widens

Their findings are detailed in the graph below:

One reason for this large discrepancy in net worth is the concept of ‘forced savings’ created by having a mortgage payment and was explained by the New York Times:

“Homeownership requires potential buyers to save for a down payment, and forces them to continue to save by paying down a portion of the mortgage principal each month.” “Even in instances where renters have excess cash, saving a substantial amount is difficult without a near-term goal, like a down payment. It is also difficult to systematically invest each month in stocks, bonds or other assets without being compelled to do so.”

The Takeaway

“As a means to building wealth, there is no practical substitute for homeownership.”

If you are a renter who is considering making a purchase, talk with a Benchmark Mortgage professional who can explain the benefits of signing a contract to purchase over renewing your lease.

click here to find yours

Do’s & Dont’s for the Mortgage Process around CHRISTMAS

by bmadmin

The holiday season is always a crazy time, but that’s no reason not to take advantage of the great housing market, and make some new holiday memories in a new home. Benchmark is committed to a smooth and easy mortgage process, keep these simple do’s and don’ts handy as you start your home buying process this holiday season.

DO’s:

· Keep an eye on your holiday budget; remember not to make big purchases that might affect your credit score.
· Be sure and take into consideration your own personal schedule as the holidays tend to get hectic quickly.
· Use your neighborhoods Christmas decorations to gauge the atmosphere of the community.
· Call your Benchmark mortgage professional l to start your home search today! Nothing is better than a Christmas spent in a new home!
· Remember it is the holiday season for your loan officer and realtor. While they will gladly assist with any questions you might have, be mindful of their time.
· Let Santa and the Elves know that you have moved addresses!

DON’TS:

· Don’t make any large purchases (things that require credit checks or opening new lines of credit). This can affect your credit score and change your loan status.
· Don’t wait until the last minute to complete and send the required documents to your loan officer. Doing it in a timely manner will ensure a smooth loan process.
· Don’t rush putting an offer on a house just because you can close before the holiday season. Remember, this is a long-term decision.
· Don’t use your entire down payment on holiday gifts. Save the money you can.
· Don’t accept monetary gifts from relatives without consulting your loan officer first. (Monetary would be like down payment assistance)

Common Mistakes When Buying & Refinancing

by Benchmark

When buying or refinancing a house, you will want to avoid common mistakes. If you can do so, you will save money and help your cause greatly. With this in mind, here are the top four common mistakes to avoid when you want to buy or refinance a house.

Mistake 1: Not Understanding Rates

First and foremost, when you borrow tens of thousands of dollars, you will want to know as much about rates as possible. At Benchmark, your mortgage professional will help you do so by reviewing your credit score and letting you know exactly where you stand. They explain what the current rates are and help determine which loan product will best fit your financial needs. This will allow you the opportunity to learn how your monthly payment can change drastically by knowing how the rates and loan products work.

Mistake 2: Ordering Your Own Appraisal

Now, if you are refinancing your property, don’t think that in addition to a Benchmark Appraisal you are required to independently verify the value of your house. Benchmark’s Appraiser Panel is staffed with many of the local appraisers found in your area. At Benchmark, we ensure that you receive top quality appraisal reports so that there is no struggle to enjoy the lowest rate when you refinance your home.

Mistake 3: Looking At Entire Costs

All-too-often, a buyer or homeowner will forget to look at other costs associated with the loan. Sadly, they can add up quickly and leave you with thousands of dollars of fees added on to the loan. To avoid this, look at the paperwork and ask questions with your Benchmark Mortgage professional. If you feel it contains inaccurate information, speak up. Your Benchmark Mortgage professional will help ease your concerns and answer any questions you may have. We understand that wasting money on closing costs and other fees is the last thing you want to do so we are here to help assist you every step of the way.

Mistake 4: Not Fixing Credit

Finally, when buying a house or refinancing, you will want to clean up your credit and pay off old debts. If you don’t, you may not qualify for the lowest rates possible. For example, if you have a score of under 650, you may end up paying more than a person with a score above 750. So be sure to pay off any old debts, fix any errors on your report and catch up on any late payments. Otherwise, you may end up paying a higher interest rate.

With these four simple tips, you can ensure your refinance or house purchase goes smoothly the first time around. Remember, you need to protect yourself and avoid common pitfalls others make. When doing so, you will save money and speed up the process.

7 Personal Finance Questions Most People Can’t Answer

by bmadmin

I’ve come to realize that a vast majority of us share the same goal in life. We want to commit, work, face and take responsibility for as little as possible, yet still be comfortable. In schools today, the child that makes B’s and C’s with little or no effort is met with more admiration than the child who devotes hours to their task to receive an A. Although in school one can make an argument that it is overall better to be “well rounded”, when it comes to life and especially to finances only those who are committed reach the highest levels of success.

People Aren’t Lazy, They Are Simply Uninspired

During my nearly two decades in business, I have observed people at virtually every stage of commitment and I have seen many climb through the various stages. Initially most people hesitate for a variety of reasons to really put forth a full effort. Sometimes it is because they are afraid of failure and can use the lackluster effort as their excuse. Other times it is because of a lack of confidence or understanding and sometimes it is simply because they don’t want to exert themselves. I used to refer to them as lazy but now I truly believe there is no such thing as a lazy person. It’s true. I’ve seen people who everyone would agree is very lazy, get up at 4am and hike miles into the woods to a location that they had scouted out weeks and months in advance simply to try to kill a deer that they will then have to cut up into smaller pieces and carry back out. That is commitment. People aren’t lazy, they are simply uninspired. You need to know what inspires you.

I am beginning to understand that the most important role I play is in helping people comprehend what it actually takes to achieve the level of success that they say they wish to achieve. For example, my 11 year old son wants to grow up and become the greatest golfer to ever play the game. To him, this will be measured by beating Jack Nicklaus and Tiger Woods for number of tournaments and major tournaments won professionally. I would never discourage any of my children from trying to reach an honorable goal, but in this case we must all admit this is a monumental task. Would it be fair to my son if I didn’t explain to him that if he really wants to achieve his goal, he will have to devote a majority of his time every day from now until he is 45 years old to improving his golf game? It will alter what he eats on a daily basis, how he exercises, who he is friends with, his grades, and virtually every other aspect of his life. At work, it is very similar. You must first determine what a person’s goal is and then help them develop a REAL understanding of what it will take for them to get there.

Why Are We Like This?

Probably the biggest observation I’ve had during my career is exactly how little time and effort people invest into their personal finances. Most of us go through life driving from home to work and hoping that the direct deposit is enough to pay the bills or “make ends meet”. We don’t really think much about savings or investments other than to do what everyone else does at work by contributing a small percentage to our retirement plan. When it comes to borrowing money, we are even worse. We simply search the internet and make a few calls and usually select a person with less financial experience than we have to advise us on how we should structure financing our new home. Why are we like this? Is it because it might be painful to face where we stand? If that’s the case, trust me, it will be a lot more painful down the road when you are forced to face it.

Properly managing your personal finances is almost exactly like growing your business and reaching any other goal. It doesn’t take that much more time or energy. It simply takes a consistent effort and a little focus. Take the time to review the basics.

Ask Yourself the Following Questions:

How much life insurance do I need?
How much do I spend each week?
How much do I take home each week?
Do I have the right kind of auto and home insurance?
What would happen if I were in an accident and injured someone else?
What would happen to my family if something happened to me?
What will my income and lifestyle be like when I retire?

These questions are so basic yet the truth is very few of you know the answers to them. If you are in your 20’s or older and have started your career, it is critical that you get a game plan for your personal finances and that you do it sooner rather than later.

As I stated earlier, I am beginning to understand that the most important role I play is in helping people comprehend what it actually takes to achieve the level of success that they say they wish to achieve. Virtually every day I meet with a client and ask them what their plans are financially for their home, family and finances. Helping them figure out the best interest rate option is easy. The real value comes in helping them figure out what they want financially and creating a game plan to get it. If you don’t have one, please get with someone and figure it out. It will help you and your family tremendously and I’m personally convinced it will go a long way toward bringing our country back as well.

Marty Preston, Branch Manager of Benchmark Mortgage in Lexington, Kentucky, is a consistent Top Producer and one of the country’s premier mortgage lenders. Marty is also a nationally known speaker and a major force in the national mortgage banking scene.

5 Reasons for a Mortgage Refinance Other Than Lowering Your Payment

by bmadmin

Naturally, if you’re paying 6% for your mortgage and you can refinance at 5%, you’re gonna do it. Although cutting your monthly payment remains an important motive, there are at least five other reasons to consider a mortgage refinance, for long-term savings and convenience.

1. Change your mortgage term

If you decrease the term of your mortgage in a refinance by going from a 30-year to a 15-year, you’ll pay a lower interest rate and shorten your total interest costs. You’ll build home equity more quickly, and pay off your loan sooner, even though your monthly payments go up.

2. Move from an adjustable rate to a fixed rate

ARMs offer low introductory rates, but they also offer long periods of uncertainty that make it hard to budget. It makes sense in a mortgage refinance to go from an ARM to a fixed-rate loan during a low-interest rate environment. You’ll get emotional security and your rate won’t fluctuate with changing economic conditions.

3. Take out cash

With a cash-out mortgage refinance, you can turn an intangible asset—accumulated home equity—into a tangible one—cash. It makes sense for a project that will generate long-term benefits, like a home improvement or funding a child’s college education. However, don’t do it for frivolous reasons. Unless you’re extremely disciplined, you could find yourself in even deeper debt.

4. Consolidate two mortgages

When interest rates are low, a mortgage refinance lets you consolidate your main mortgage and an outstanding home equity loan to realize a lower overall monthly payment. Plus, you’ll have only one mortgage payment to make each month.

5. Recover from divorce

If your home is jointly owned with your soon-to-be ex-spouse, a mortgage refinance will turn a joint obligation into the responsibility of the person keeping the home. Nothing is more frustrating than tracking down a former spouse who doesn’t keep up with his or her end of the mortgage payment.

Lay the groundwork

If one of these reasons resonates with you, contact us to see how refinancing could benefit you.