Updated information Oct 17, 2022
from my notes:
Home title lock.com
insure your home - equity
go to public records
deads in your name
how to avoid fraud
hire attorney to prove my ownership
it notifies of title change.
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Avoid These 9 Expensive Home Buying Mistakes
"Know Your Number Before The Bank Does
Before you apply for a preapproval amount, make sure you have done your homework and know what you can afford. Do not let the lender tell you what monthly payment you can afford. Make sure you have a number on paper, backed by data that shows exactly how much you can afford with a buffer for emergencies..."
I like specially these point
Ways To Use Real Estate As A Retirement Investment
#4 Going Through The Process Without A Realtor
Scenario With 4% Interest Rate
Here is a scenario I typed into my free mortgage calculator
#6 Failing To Read The Fine Print
#7 Putting Less Than 20% Down
In my above-described interest scenarios, I used the assumption that we would be putting 20% down. By putting down this much in cash, you can avoid paying private mortgage insurance each month. Depending on your loan amount, you may pay $100 – $200 a month or more for the insurance.
I hate private mortgage insurance because it is insurance I am paying for the lender. If I don’t make my payments, the private mortgage insurance kicks in and protects the lender. There is absolutely no benefit to me to pay that insurance.
Even if I only pay $100 a month in private mortgage interest for the loan’s life (assuming I don’t refinance), I would be adding an extra $36,000 to the amount I am paying for that home.
Save yourself thousands and save up to 20% to put down on your next home purchase. It will be worth it in the end.
#8 Failing To Hire A Home Inspector
#9 Watching Too Much HGTV – Buying A Fixer-Upper
3 thoughts on “Avoid These 9 Expensive Home Buying Mistakes”
Ways To Use Real Estate As A Retirement Investment
Leveraging Life Insurance As An Investment For Real Estate
This next statement might sound odd initially. However, an often-underutilized method of accumulating and leveraging capital uses the cash value component of a whole life insurance policy. This method of accruing liquid cash for real estate investing is becoming increasingly popular in real estate investing and for a good reason.
Let’s look at some of the advantages.
Diversifying Risk With Life Insurance – For A Goal Of Purchasing Real Estate
While being more involved in the initial setup than standard savings accounts, a high cash value policy also offers several unique advantages you cannot find in any other financial vehicle. The cash value growth rate or interest is often significantly higher than a standard or high yield savings account.
Again, you must go with a financially stable and reputable company.
You can easily experience a 4% guaranteed growth, plus an annual dividend within your cash value if you structure this properly.
Because it is a life insurance policy, it also offers protection as there is a tax-free death benefit. The death benefit can be used by a beneficiary to pay for costs associated with the properties and avoid foreclosures or other financial hardships.
These particular types of policies allow you to take a loan from the insurance policy’s cash value component. This means you will have access to your money, and you set the repayment schedule. You can pay it back slowly, quickly, or never.
Yes, that is correct. Any unpaid policy loans will be paid off by the death benefit at the time of the policyholder’s death. You can also take a policy loan for any reason and without restriction. You do not have to explain to the insurance company why you need the cash, because it is yours. You are acting as your bank.
Another key is that if you take or even default on the loan, there is no credit reporting, although the policy may lapse. The cash value is also often protected from debtors and creditors (in most states).
Life Insurance Advantages By The Numbers
Currently, a typical interest rate on a policy loan is 4%. If your cash value is earning 6% (guaranteed interest rate plus dividend), you not only have your money working for you in real estate, but you have also received a 2% spread on your policy loan.
You become your own personal banker and are now making money exactly how the bank does when they sell you a loan! Oh, and by the way, your 2% spread on your policy loan is a 50% annual profit on your cash value.
Let’s break this down a little more and see exactly how it works.
Whole Life Insurance Dividends
One of the single most significant advantages of the whole life cash value is the ability to be paid dividends on money which has been taken as cash through a loan. So, essentially you’re still earning interest and dividends on borrowed money while also getting to use it for real estate.
Let me ask you a question.
Does a bank or lender pay you interest on the money you’ve borrowed from them? Most certainly, the answer is no.
This is called a non-direct recognition loan. For example, let’s say you have a cash value in your policy of $50,000. If that money were to be held in a savings account, you would receive interest on $50,000 for the account.
However, if you were to take $40,000 out of the account, you would only earn interest in the remaining $10,000.
Now let’s look at the same scenario with a properly structured whole life insurance policy with a $50,000 cash value. While the cash value is $50,000, you would receive dividends or interest based on the $50,000 even if you took the same $40,000 as a policy loan.
Instead of withdrawing cash from the policy, you take a loan against the plan for $40,000. You will still receive interest or dividends based on the $50,000 figure. In the savings account example, your $40,000 is spent, gone. In the whole life cash value example, your $40,000 is earning interest as if you never took the money out of the account.
Your money is now working in two places at the same time.
Using Whole Life Insurance To Fund Real Estate Investments
You can make interest off the cash value while it is being utilized as liquid cash in your real estate investments. This is simply not possible with money held in a traditional bank setting. You now become the banker.
In paying your policy back rather than a lender, you can now re-leverage the same money. By doing this, each time your cash value is more significant and more substantial due to the non-direct recognition loans that allow you cash to work in two places at once and act as your bank.
Therefore, instead of paying a bank or lender 5-12%, why wouldn’t we give ourselves the spread and earn 50% on our cash and still use that cash to invest in real estate?
Additionally, these loans are tax-free, and there is no credit check involved. This can be a potent tool for property owners. Since the insurance company does not care what your policy loan is for, they will not charge you a higher interest rate because it is for an investment property. The policy’s cash value can also act as a great emergency/repair fund for your properties.
Key Points
In closing, it is essential to speak with a financial professional to set up the policy correctly as the plan needs to be structured to maximize cash growth and have this unique loan feature. Not all life insurance companies offer this setup, and a standard life insurance agent will not provide this type of structure, nor will they be familiar with the process in doing so.
I have designed several policies like this for myself for real estate investments. There is simply no better way to currently utilize leveraged money and get a phenomenal rate of return on your investment.
Disclaimer: structuring a whole life policy in this way dramatically reduces the commission for a financial professional, so they typically will not offer to do this or have much knowledge of it.
In conclusion, owning real estate can be a great addition to your retirement portfolio. It is imperative to be aware of the risks and utilize tools available to you to maximize profit. Be sure to have a reliable, long-term plan before investing so you increase your chances of success and maximize your return rate.
If you have questions or would like personalized advice, you can schedule a one-on-one call with Gary (an investment advisor/fiduciary) here:
https://calendly.com/downes-dalessio/thin-line-financial
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