Do you have a mortgage question and are you looking for mortgage advice but you are not sure where to turn for unbiased answers.  Look no further because the ultimate mortgages book is here.  Mortgages: What You Need to Know, Strategies to Take Control of Your Financial Future answers most of your mortgage questions.  This book covers:

• The different types of mortgages
• Understanding adjustable rate mortgages
• How an amortization schedule works for a 30-year fixed rate mortgage, and
• It provides mortgage questions you need to ask yourself in order to determine which mortgage is right for you? 

The last chapter covers how to find a good mortgage planner in your neighborhood and what questions you should ask this person to ensure they have your best interests at heart.

Financial literacy is a big issue and this book will provide you with everything you need to know about mortgages so you can make smarter decisions for your future.  The main theme of this mortgage book is to Educate and Empower the individual:

• To take control of their financial future buy slowing down to understand the mortgage process
• How a mortgage affects short term cash flow while being mindful of long term retirement goals. 

After all, the type of mortgage you choose will directly impact your ability to save for retirement. 

Financial Advice

Q. I am living paycheck-to-paycheck; can you advise how I can stop this vicious cycle?

A. If you own a home you can consolidate your debts to stop living paycheck to paycheck. Carrying Debt Prevents You From Saving Each month there are three major spending categories: the mortgage, credit card bills and retirement accounts. If short on money, one will get squeezed out. Can you guess which one it is? Many books and articles have been written that detail this phenomenon: if you carry debts other than your mortgage you will never be able to get ahead and carrying debt prevents you from saving.
If you are a homeowner it may make sense to tap the equity that has built up over the years to consolidate debts into one payment. This approach will often reduce monthly obligations and possibly increase tax deductions. A strategic refinance to consolidate debts can also free up cash that can be used to invest towards retirement. Now, you might be thinking you are simply borrowing from Peter to pay Paul and that you are actually extending the overall cost of the credit card debt. But are you really? Here is an example of clients in their 50s (we’ll call them Mary and John) to illustrate.
Mary and John had run up some significant debt on several credit cards and were referred to us by their accountant. Like many of us, life had gotten in the way and over the years they had amassed $35,000 in credit card debt in addition to three mortgages. They had no retirement savings. With an average interest rate of 23%, you can imagine that the minimum payments were killing them and they were living paycheck to paycheck. We were able to structure a program for Mary and John that reduced their overall monthly payments by $1,260―that is more than $15,000 per year—and they now have positive cash flow every month to invest for a rainy day.

Q. There are layoff rumors flying at my office, is there anything I can do to better prepare myself financially if I get the ax?

A. If you own a home one suggestion to ensure you will have access to cash to carry you until you land a new job is to take out a home equity line of credit now before you get the pink slip. The reason is that banks lend to those that can prove they can repay the loan. If you don’t have a job banks will not lend you the money. This can be done in a matter of days so I suggest you call your local bank today. For those that already have the line of credit set up and for those that are applying you may want to draw a portion of it today and place the cash in an emergency account. While this is not the best use of your cash flow, this year has brought about an unprecedented freezing of many HELOC’s across the country so if you think you may get the pink slip I recommend creating this emergency fund now before you lose it. If you end up not getting the slip then you can always pay the loan off. Yes you may pay a few hundred dollars for drawing the line and not using it but chalk it up as insurance which of course will be a lot less than if you start to miss paying your bills due to lack of money.

Q. Does it make sense to use the money in my 401k for a down payment on a home?

A. Rarely if ever does it make sense to borrow from your retirement plans to fund the purchase of a home. The reasons are:
First you will be depleting your retirement funds that of course will come back to haunt you down the road.
Second, you may incur a penalty by withdrawing unless under the exemption but taxes would still be owed on any gains.
Third, if borrowing they will have another monthly obligation to pay for which increases their monthly obligations making qualifying for a loan even harder.
Fourth, if you do borrow money and then leave that employer without paying it back the funds will be treated as ordinary income subject to income tax for that year. There are still plenty of programs out there for first time buyers for low down payments, 100% financing and even closing cost credits through various agencies.
Also, other programs still permit gifts from family members to use in the purchase which of course is always more advisable than depleting one’s retirement accounts. Borrowing from a retirement plan should be viewed as a last resort and should rarely be used. If the money is not there for a down payment then I’d spend another year or two saving up for this event.