Mortgage Planning

Why is Mortgage Planning important?

Many people treat their mortgage as an independent part of their financial picture. As such, they just try to get the lowest rate or monthly payment and move on with their lives. However, this could be a terrible mistake because there are usually faster and safer ways for people to achieve their financial goals if they were to have a customized Mortgage Plan designed specifically for them. A professional Mortgage Planner can help them design such a plan and help them stay on track throughout the years as their goals and circumstances change.

Just like the electrical system in your home must work with all of the other systems for maximum performance (e.g., Heating and Air Conditioning), so too must your mortgage work in conjunction with your assets (e.g., retirement accounts, monthly cash flow, college savings) and other liabilities (e.g., credit cards, car loans, etc.) for maximum financial performance for you.

To carry this example a little further, if you were building your dream home, would you hire a professional electrical engineer to design the electrical system for the home? Would you design it yourself? Would you search the Internet to find the cheapest generic design and install it yourself? I hope not, but that is exactly what many of us do when we shop for a mortgage. Not surprisingly, this lack of Mortgage Planning slows the rate at which we move towards our financial goals and can put us in a position of reduced safety along the way.

What is involved in Mortgage Planning?

The first step in creating a Mortgage Plan is to meet with a professional Mortgage Planner to explore your personal, professional, and financial goals. These goals may include: buying new property, refinancing, paying off the mortgage, debt consolidation, wealth creation, equity management, retirement, college savings, creating business start-up capital, or taking care of elderly parents or family members with special needs. Why does the Mortgage Planner need to know all of this? There are two reasons that this is important.

First, many people never stop to consider what is important to them and why. This exercise has a tendency to create more clarity for you as you move forward. In turn, more clarity usually results in a higher degree of confidence in your financial future and increases the likelihood of your success by following through with all of the elements of the Mortgage Plan.

Second, no two people are alike, and proper Mortgage Planning takes this into account. By understanding you, your goals, your habits, your beliefs about money, and your overall financial picture, your Mortgage Planner can customize several different options that are suitable for you. Your Mortgage Planner will present these options to you with a helpful printout that shows a side-by-side comparison of the costs and long–term effects of each loan type for you. At that time, you can have a discussion with your Mortgage Planner about the different considerations associated with each of your loan options so you can make an informed decision that’s right for you.

Besides loan type, your Mortgage Planner can also help you with other important aspects of the loan process, such as deciding on the size of your down payment and negotiating seller concessions to help you get a better interest rate. By the end of the Mortgage Planning process, you should feel educated and empowered by the Mortgage Plan you have put into place to optimize the way your financial house will operate in the future.

Once you and your Mortgage Planner have decided on a course of action, the next step is to begin the Mortgage Process.