Is your home equity unemployed?  Do you have unemployed equity in rental property or a vacation property? Learn how to use an interest only mortgage to reposition your home equity into a safe investment to dramatically improve your retirement years while reducing your monthly cash outlay.

Learn how to use an interest only mortgage to reposition your home equity into a safe investment to dramatically improve your retirement years while reducing your monthly cash outlay.

 The average American utilizing a 401k or IRA savings plan will save $120,000 on their taxes during their working years.  Those tax savings will be exhausted within the first 20 months of retirement!

What happens then?  If you live to 85 you will pay nearly $500,000 in TAXES! 

Where does that money come from?  YOUR HARD EARNED PRINCIPLE!

Can your current retirement program handle a principle reduction of $500,000 and still keep you in the life style you want to enjoy at retirement?  Finding Your Missed Fortune can show you how to avoid this and many other money traps and money misconceptions. 

HomeEq.com can show you why and how.

Your "Missed Fortune"

About 4 % of American households have a financial net worth in excess of $ 1 Million. 80% of them did not inherit it. If you live in a free-enterprise system, have the ability to earn some money, and are willing to put some of that money to work, you can literally become a millionaire with discipline. It will not happen overnight but it will happen if you adhere to the principles contained in this web site. Yes, you can be a millionaire-even a multi-millionaire-and your greatest catapult is sitting right under your own roof! Two-thirds of Americans have equity in their home. Because your home is probably your greatest financial asset, the key to enhancing your Net Worth is to manage the equity in your home to increase liquidity, extend safety, improve your rate of return, and maximize tax deductions.

The dream for most Americans is to have full home ownership. We are taught from the time we are young to either avoid or to get out of debt as soon as possible. Please understand theses concepts are not meant to advocate that people go further into debt. I, too, advise people to get out of debt as soon as possible. However, I advise they do so using the wisest method to maintain liquidity and flexibility-a method that is not embodied in any of the traditional methods.

You can accumulate sufficient cash in a conservative, tax-deferred mortgage acceleration plan to pay off your home just as soon or sooner, sometimes in less than half the time, than with traditionally accepted methods. Additionally, you will have the following advantages:

Truly, in this turbulent day and age, there is nothing more constant than change. It is imperative that we as American taxpayers stay flexible when new situations arise, either from tax legislation, inflation, or other external influences over which we have no control.

Let me offer a different definition of what being in debt or out of debt really means to the financially independent person. I consider a home "paid for," even though it may be mortgaged to the hilt, if sufficient liquid assets are in a safe environment that could wash out the liability of my mortgage. I sleep better at night with my home fully mortgaged, when the equity is removed from my property and repositioned in a safer, more liquid environment. Contrary to popular belief, any conceivable financial setback can likely be best resolved if your home equity is separated from your property rather than trapped in it!

If you were to take a loan application to a bank during a critical time in your life when you were sick, unemployed, or simply had a financial setback, chances are the bank would say, "Sorry, come back when you have the ability to repay." It does not matter how many assets you have, because most banks are not collateral lenders. They love to tie up assets with liens, but their first requirement is that you show your ability to repay. You almost have to prove to the banker you do not need the money before he will loan it to you!

My recommendation is that people have their home mortgaged as high as feasible for their budgets. Some want their home totally free and clear because it gives them piece of mind. I understand that desire.

However, the road to that piece of mind may come at an extremely high price. For equity to be in as safe as a position as possible, I contend it must either be repositioned out of the home by mortgaging it to the maximum amount feasible, or left in a home that is totally free and clear. Any place in between is a risky position from a safety and liquidity standpoint.

Separate your equity from your home by using a first mortgage, second mortgage, or equity line of credit, and keep it in some type of safe liquid side fund such as those introduced in section three.

The Side Fund...

Let’s suppose I instead deposit the extra-principle amount into a side account. In all likelihood, I will still be able to pay off my home early, but even if I can’t and it takes six months longer, it will still be better to use a side fund instead of paying extra principle on my mortgage.

Why?

 Because of the liquidity, safety, rate of return, and tax benefits I achieve from having my money available in that side fund far outweigh any hypothetical disadvantages.

Why are banks so willing to pay you interest to borrow your money? They are willing to do so because they loan that same money to the consuming public at a higher rate of interest. Arbitrage (borrowing at a lower interest rate and putting the money to work to earn a higher rate) allows the bank to generate a return over the cost of obtaining those funds.

Let’s use a simple example. Let’s say Family A lends $10,000 to the bank, depositing it into a CD earning 6%. In effect, when they make that deposit, Family A is loaning money to the bank. The bank is willing to pay them a certain amount of interest for that money, which is dictated by the money market and the Federal Reserve. Soon after Family A makes the deposit, Family B goes to the same bank, wanting to borrow $10,000 to buy a car. The bank agrees to loan $10,000 to Family B at 9%. In the first analysis, who really lent and who really borrowed the $10,000?

Family A deposited the money with the bank, thus putting that money into a lended position.

After borrowing those funds from Family A, the bank then lent that money to Family B for the purchase of the car. Family A and the bank both lent money: on the other hand, both the bank and Family B borrowed money. Did the bank turn a profit? You bet it did!

Banks may borrow money at 6%, then loan the money back out at 9% and, after management fees and overhead expenses, end up generating between 1 and 2 % net profit margin. This arbitrage between what the bank had to pay for that money and what it netted by investing that money allows them to earn a conservative profit.

Many of you have probably heard the old adage: "there are two people in the world: those who pay interest and those that earn interest." This is true to an extent, but more correctly, the adage should say: "There are three kinds of people in the world: those who pay interest, those who earn interest, and those who pay interest in order to earn greater interest"-just like highly profitable banks and credit unions!

It’s easy to see if a bank can borrow money from the Federal Reserve at 4 or 5 percent then turn around and lend that money at 8%, they can make a handsome profit, especially on large sums. Why can’t you do the same, even with somewhat smaller funds?

I consider interest expense an "employment cost" because, rather than simply separating the $100,000 of equity and burying it in a tin can in the backyard, you are going to put it to work, or employ it.

If a couple is in a combined federal and state income tax bracket of 34%, when they borrow $100,000 against their home at 8% interest, the true cost may not be 8% because, according to current tax laws, they may be able to deduct $8,000 off their income tax return. The $8,000 is the gross outlay in interest expense, but because of the income tax deduction, they receive 34% of the $8,000, or $2,720, in tax savings. The interest expense, or employment cost, of borrowing that $100,000 is, therefore, only $5,280 after they receive their refund at the end of the year. Thus, the true cost of borrowing against your home at 8%, in a 34% marginal tax bracket, is only 5.28%!

If an 8% employment cost is tax deductible, but the lost opportunity cost to invest those funds is a non-deductible 8%, are they really equal? You have no choice but to pay one or the other.  Which will you choose?  My advice is to choose to incur deductible employment costs rather than to incur non-deductible opportunity costs.

Please review the PowerPoint Presentation

read more...

Take the NEXT STEP, Contact HomeEq.com today!

** We are located in Winston-Salem, NC and primarily service the greater Winston-Salem, Greensboro and High Point areas. Those areas include, but are not limited to the counties of Forsyth, Guilford, Yadkin, Davie, Davidson, Rowan, Randolph, Alamance, Surry, Stokes, Iredell, Catawba, Lincoln and more.

** Winston-Salem, NC and Piedmont-Triad Area, NC Residents ONLY