WTR Mortgages Part 1

Can you answer this question: What is the most important factor in determining the cost of how you pay for your home? The truth may surprise you. For many people their home is one of their most valuable assets. The tactics of how you pay for it could potentially save you thousands of dollars, or unnecessarily cost you thousands of dollars that may have been avoided. WTR discusses ALL the truths of how mortgages work, along with the costs, and possible tactics to avoid losses. NOTES [00:30] Kevin: This is going to be a two part discussion. Today, in part one, we’re going to talk about the different kinds of mortgages and the many factors that go into the true costs and what it means to have you home actually paid off. [01:30] We’re going to start off with a quiz for our WTR listeners. Remember your answers because at the end of the episode, we will see if they are the same as your original answers [01:57] Brian: People don’t usually like taking quizzes, but this one could save you some money, so it’s worth taking. These answers are what clients would originally suspect (the correct answers are at the bottom of the show notes page)[02:05] True or False? A large down payment will save you more money over time than a small down payment.True- you have less loans and you pay less interest [02:33] True or False? A 15 year mortgage will save you more money over time than a 30 year mortgage.True- interest rates are lower for a 15 year mortgage [02:55] True or False? Making extra principle payments saves you money.True- if you make more principle payments, you’re paying it off sooner and hence paying the bank less [03:13] True or False? The interest rate is the main factor in determining the cost of the mortgage.True- the higher the interest rate, the more you pay [03:25] True or False? You are more secured having your home paid off than financed 100%.True- if it’s paid off then it’s good to go, because the inevitable may happen where you can’t pay off the mortgage payment [04:00] The first thing to consider is that there are a lot of types of mortgages out there[04:17] Can be quite confusing when you look at all of the options what is the best type [04:52] It’s up to us to try to figure out from a business perspective which ones we can do the best with (to save the most on or make the most on) [05:03] Everything that you know, you probably think is true (if you know it, it must be true). Every once in a while, however, we come up against an idea that we don’t really know the answer to (don’t know if it’s true or false). When we come up against that kind of information, we can either accept that idea (get a bigger box to accommodate it) or we can reject it because it doesn’t fall within our box of knowledge[05:54] When it comes to mortgages, many people find mortgages to be an emotional subject because it’s tied to their house. What we think is true about mortgages may or may not be true in reality[06:13] If we come up with a different conclusion, it’s not necessarily false just because it’s different [06:33] Let’s talk about financing in general. There’s two types of financing[06:46] Self-financing: taking money out of your bank account to pay for a house, which results in a cost (not getting interest) [07:21] Bank financing: using the bank’s money to pay for a house, which results in a cost (interest rate for the use of that money) [08:25] Reasons/ factors why you may want a mortgage[08:38] The majority of people can’t write out a check to pay in full for your house [08:57] When you have a mortgage, you get to have a...