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May 2008 Part One
With all the rhetoric in the news about housing and mortgages, as a homeowner you’re probably wondering how you can begin to determine if you have positioned yourself correctly for this market.
There are several things to consider when starting this process. Before you meet with a Mortgage Advisor, you should consider a number of items. When you review these items keep in mind both sides of the financial coin: debt management and asset management. Here are a few:
First, what are your short and long term financial goals? Before starting any financial process you should consider what you would like to accomplish in the short term (from each month and up to five years) and then determine where you would like to be in five, 10 or 20 years. Would you like to create more wealth? Or perhaps you are trying to eliminate debt? Putting these goals on paper gives you a working foundation to establish a road map to your destination. Also, keep in mind what next meaningful life event(s) may happen and how this will change your financial needs. Life events such as starting a family, kids heading to college, retirement or perhaps having to care for elderly parents can throw your financial train off the tracks if you haven’t considered them in your planning.
Second, what is your current financial lifestyle? Whether you describe yourself as a scrooge, a gambler, a saver, or a spender is important. But also consider whether you live modestly or like to have all the latest toys. Also review who you pay first every month. Is the mortgage company, credit card companies, the electronic store or is it yourself? Knowing your financial personality can shed some light on the reasons behind your successes and failures with your finances. This isn’t about a right or wrong; but rather recognizing your tendencies to ensure that your mortgage/debt strategy is built to help you achieve your goals despite what tendencies you may have.
Third, how would you describe your financial philosophy? This relates to your risk tolerance level when it comes to financial matters. Initially, most people will say they are very conservative. But take a look as to how you are managing your finances. Do you have all your money in one place? Are there particular investments that you like? Do you research before making these decisions or jump right in? Often after really evaluating your personal situation, you may find that your decisions may lean more towards moderate risk, and sometimes maybe even aggressive, without being aware of it because you haven’t evaluated your entire financial picture. If there is a difference between who we are financially and how we act financially, this may be standing in the way of our monthly goals.
These are three areas to review to have a better understanding of your financial positioning. In our next article we will address two additional items that are key to your financial success when it comes establishing a mortgage strategy.
You should always consult with a mortgage planner and financial planner when implementing financial strategies to make sure it is the right fit for your unique individual financial goals.
CLICK HERE FOR ARCHIVES
Rich Flanery, CMPS, CMA is a Certified Mortgage Planner and Certified Mortgage Advisor with over 10 years of experience in the mortgage lending industry. Rich is one of just a handful of Certified Mortgage Planners across the country, and he lives and works in Estes Park helping area residents realize their American Dream. He can be reached at 970-577-9180 or via email at flan@frii.com.
May 2008 Part Two
Where do I start to find the right mortgage strategy?
In our previous article, we highlighted important items to review in establishing the proper positioning for your home loan. Topping the list was writing down your short and long term financial goals. This is an excellent place to start as it will establish your destination. Second was your financial lifestyle, meaning how and where you use your money. Third, what is your financial philosophy? We asked you to find out where you fall on the risk tolerance scale from conservative to risk-taker.
There are two additional items to review that can be beneficial when it comes to understanding your money management and what type of mortgage strategy may be appropriate for your situation.
Fourth, what are your monthly cash flow goals? Monthly cash flow is perhaps the most important aspect of any mortgage plan because it truly impacts our day to day spending decisions. So, what are you trying to achieve each month as it pertains to your monthly cash flow and budget? Consider whether you’re spending too much in one area, whether a monthly payment is too great for your lifestyle, or whether you would like to put more into savings and retirement accounts. Also, if all your money is tied up in one place you may need more liquidity. Or perhaps you need to focus on improving your tax situation, or earning more interest while paying less interest.
And lastly, what is you financial discipline level? Be honest. A simple look at your credit report could help you evaluate this. Credit card balances close to or at the limits or any collection accounts may mean this is an area you need to work on. It also isn’t helpful if you aren’t able to put money aside every month for savings or find that there is barely enough money to get you through the month. Also consider whether you are easily swayed by marketing to make unnecessary purchases. Most importantly remember you are responsible for these decisions and where you stand today. It is your responsibility to acknowledge your mistakes, and use those lessons to better shape a plan for the future.
There are numerous strategies when it comes to managing your mortgage so that it is a right fit for you. Take time to evaluate your entire financial makeup to determine the role your mortgage will play in your overall financial plan. By understanding why you have a particular mortgage and how to manage it will be very beneficial to your long term financial success.
You should always consult with a mortgage planner and financial planner when implementing financial strategies to make sure it is the right fit for your unique individual financial goals.
CLICK HERE FOR ARCHIVES
Rich Flanery, CMPS, CMA is a Certified Mortgage Planner and Certified Mortgage Advisor with over 10 years of experience in the mortgage lending industry. Rich is one of just a handful of Certified Mortgage Planners across the country, and he lives and works in Estes Park helping area residents realize their American Dream. He can be reached at 970-577-9180 or via email at flan@frii.com.
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