Its the Economy Stupid

After a fairly frustrating week of hyper active rate fluctuations I collapsed on Saturday, tired, worried and spent.  Interest rates are at their lowest level in years yet nobody is willing to pull the trigger on a refi to lower their rate. 

Housing prices are at their lowest level in years and no one is willing to make an offer to buy.  Rents are rising, foreclosures are rising and the only good news is gas prices are falling.  So what’s the problem.  It’s this economy!

I remember talking about this day way back in December 2007.  Back then I said we were in a recession and back then everyone, including my wife, just about clobbered me saying I didn’t know what I was talking about.

But as it turns out, this stupid hick with a high school education from the southside of Atlanta was right!  http://www.marketwatch.com/news/story/US-Q3-GDP-down-05/story.aspx?guid=%7B282E197A%2DAE1C%2D47AE%2DB0EB%2D7C9F6C8C951F%7D

As reported on MarketWatch.com, a division of The Wall Street Journal; “ Economists now say that a recession began December 2007…”   Boo-ya!  Sorry for the glee, but I love it when I’m right.

So why my glee?  Not just because I’m right, but because business is cyclical.  Once business and government realizes and admits that there is a problem, solutions begin to happen.  We’ve been through a tough year and may have a little longer to go, but ultimately our economy will turn around.

Between now and the summer of 2009 we will hit true bottom.  After that the economy should begin a slow rise out of the doldrums.  We should remember our history.  Other than The Great Depressiona, no other ecomomic downturn has lasted more than a couple of years including the huge recession at the end of the Carter administration.

So after some thoughtful introspection I’ve come to a realization.  It’s the economy stupid, that’s why business is slow and that’s why people make some of the poor economic decisions they make.  But the smart players, the ones who don’t let fear guide their decisions, will be happy that they refinanced their homes and made offers and bought new property for their portfolios during these scary times.

Ding Dong Your Debt is Calling!

Ding Dong is the universal written symbol for a doorbell.  It’s also the universally understood name for someone that isn’t quite right in the head ….if you know what I mean.

Will, I’m not afraid to admit it, I’ve been a Ding Dong more times in my life than I care to remember!    But I don’t have to be that person any more, at least where debt is concerned, and I’m helping others shake that moniker as well.

Listen to this story:  A client, we’ll call him Bob Smith, comes into my office.  Old Bob has a ton of credit card debt and the minimum payments have been climbing lately.  The credit card companies are lowering the available credit, raising the interest rate and increasing the minimum monthly payment!

So Bob comes to me for a solution, what can he do?  Well first he can use some of the equity in his home to pay off the credit card debts.  We turn his 6.5% 30 year fixed rate mortgage into a 5.375% 30 year fixed rate mortgage.  The debt consolidation saves him almost $700 per month!

Good right?  Yes, but it gets better.  Next we tell Bob he still has a problem.   You see, the equity in the home was a safety net and we need to get that back as quickly as possible.  We show Bob how to use a portion of the payment savings to build his equity back up rapidly.

With our software we run a scenario using his regular income and the $500 in payment savings as discretionary income.  The program tells Bob how to pay his bills and if he follows the instructions Bob will pay off his new 30 year mortgage in just 8.5 years! 

It gets better.  You know that equity we used up paying off those credit cards?  He gets that back in 2.75 years!  Bob’s life is changed and he’s DEBT FREE in just 8.5 years.

Ding Dong your debt is calling! and it doesn’t have very nice things to say.  Do you want to know how to tell your debt to take a hike?  Give me a call, interest rates are low, low, low and with our special debt repayment software we can have you debt free in no time!

Michael Gross is President of Dividend America Mortgage.  He has been a builder, a Realtor and a real estate appraiser.  He uses all of his expertise to show others how they can use a mortgage to create wealth through home ownership and now he’s helping people get out of debt in 1/3 to 1/2 the time.  Contact Michael at 770-350-7373 or mgross@dividendamerica.com.

Debt Free as easy as 1, 2, 3!

In my last post I talked about the seriousness of debt in America.  I was …and still am… incensed that the Treasury and our government think that the only way out of our current economic crisis is to have Americans spend more!  It’s craziness!

I have taken a new approach and it is unbelievabley exciting.  I am using technology to get myself out of debt.  If you have a moment I want to tell you a little story about my own situation.

You see, I own a mortgage company, and we’re not doing so well right now.  LOL.  But that’s okay, I’m blessed with a beautiful wife, good health and the God given talent to know when I have to change my business and my life to succeed.

I own a home in the burbs and two investment properties.  I have about $20K in debt associated with my business.  Total all the money I owe and it is over $750,000.  That’s three quarters of a million dollars!  It’s a little daunting to think I owe this much money, especially since I’m not wealthy by any stretch of the imagination.

My rentals break even every month, my mortgage biz is in the tank and my wife got laid off from her architecture job.  Thank the good lord above for the severance package.  Anyway, we would love to lower the interest rate on all of our mortgages, but with an income equal to our debt payment every month, we don’t qualify.

So I sat down to try and figure out how I could get out of debt.  Sell the rentals?  Not in this market, I’d take a huge loss.  Sell the primary, same thing, and I lose all that equity.  Then I found a better answer….

Technology!

There is a lot to be said about technology and what it has done for our country and our standard of living.  Now there is a tool that can help me become DEBT FREE in a very short period of time.  Under my current repayment structure, I will be debt free in 35-37 years (that’s because of some of the interest only mortgages I have.) 

However, using this software and paying my bills the way the software instructs me to, I can be DEBT FREE in 16 years without changing my income structure.  How is this possible you might ask?  I know I did, I couldn’t believe it!

Well I did some research.  The software recognizes long-term debt in two categories, open ended and closed ended debt.  In the closed end debt your interest payments are static and are set on an amortization schedule that gives the advantage tot he bank.  You pay them the interest first and the majority of the principal is paid at the back of the loan.  Good for the bank, bad for you.

In an open ended loan, an equity line or a credit card, the interest calculation is dynamic.  Interest is calculated based on the average daily balance.  The software picks strategic times throughout the year and within the am schedule of the closed end loan and uses the open end debt to pay off chunks of principal in the closed in loan. 

This strategy is important because the larger the chunks of principal that are paid on the closed end loan, the more principal reduction you will achieve with the regular payments on that loan.  Once the debt is transferred to the open end loan, the software has you transfer income into that loan to lower its balance immediately.

At first blush this sounds a little scary, but here’s the important part.  You pay your monthly bills out of the open end loan.  This has a two fold effect on your debt.  First, it lowers the average daily balance of the open ended loan.  This means that you are actually paying a lower effective rate on the principal balance that was ‘in’ the closed end loan.  Second, it gives the ability to operate your home finances in the same fashion you always have, there is very little change to the way you live your life.

Under this program I will save over $450,000 in interest payments.  Even if I sell the investment properties in 7-10 years, I will increase the equity in those properties by more than 10 times the current schedule!  That will mean hundreds of thousands of dollars in my pocket.

Do you want to be DEBT FREE?  I am so excited about this program I have added it as a product in my company.  If you can’t refinance and you want to get out of debt, or if you can refinance and create lower payments and you want to use that payment savings to get out of debt faster, I would like to show you what I can offer.

Give me a call and become debt free today.

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call 770-350-7373 or email mgross@dividendamerica.com