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I hate getting into technical mortgage topics and this one is even confusing for

mortgage professionals.

I got so many emails asking me questions about Pay Option mortgages that I decided to go ahead and

tackle the issue. Hang on tight!!!

You have probably seen the ads on TV. “Cut your mortgage payment in HALF!!!!” Get a $200,000 mortgage for under $400 per month!!”

It almost sounds too good to be true!!!!

You have probably seen the ads in the newspaper. Even more creative, they

sound like the ANSWER to your home-buying DREAM!!

“1 Month Option ARM”, “Smart Choice,” “Smart Pay,” “Pay Option ARM,”

“Pick a Payment Loan”, “Cash Flow Option Loan.”

These are all simply well-branded names for what is known as a “flexible

payment ARM.”

They may have different rules but nearly all share the same main premise.

Lowest payment possible.

Even though you save money on monthly mortgage payments with this type of

loan, you can also lose your some of your equity.

Here is how they work. Once again, each program has slightly different

characteristics. I will discuss the characteristics of the ones of which I am most

familiar.

Let’s say you borrow $300,000. Each month you will get a mortgage statement

that gives you the choice of up to 4 different payment options. Each month YOU

choose the payment you want to make.

For example:

OPTION #1 will be the minimum payment.

This will be the lowest payment based on the Start Rate of your ARM. The first

year this option will be a “teaser rate” that is good for between one to 12 months

and be the one like 1.000%. This minimum payment will change each year.

This is the one to be careful of. Making the minimum payment each month will

very likely mean you will end up owing more than you borrowed.

When your loan is structured so that you can actually OWE more than you

borrowed it’s called NEGATIVE AMORTIZATION. More on this below.

OPTION #2 will be an interest-only payment based on the ARM of the program.

The program is usually is tied to very short-term Adjustable Rate Mortgage, like a

One or Three Month ARM. Although you get to make an interest-only payment,

plan on it adjusting regularly.

OPTION #3 will be a 15 year payment and will pay off your loan as if it were a 15

year payment schedule.

OPTION #4 will be 30 year payment and will pay off your loan at the “Fully

Indexed Rate”

Sounds great but confusing, right?

You should be confused. These programs are very complicated, which creates

an even greater danger that borrowers will take them without fully understanding

the risks.

I have had many clients come to me for refinances who are currently in these

programs from another lender. Not a single one understood the program and

they had been in it for some time.

The problem is borrowers who don’t understand these programs may someday

be in a mortgage with a payment they simply can no longer afford. They hear

“1.000%” and yell, “sign me up!!!”

The scary about these programs is the negative amortization part that the

lenders do not quite explain properly.

Let me tell you how it really works so you can see the pros and cons.

Let’s say you love Option #1 and for the first 12 months you pay the teaser rate

of 1.00%. On a $300,000 this is around $965 per month. Sorry you can’t do this

as interest-only.

When you locked the loan you did this using the Treasury as the index, and the

program has a 2.75% margin.

The margin is the single most important thing to look at when selecting a Pay

Option program. It is usually higher than the rate itself and the lender can

sometimes adjust this for you.

Let’s say when the bank sets your rate, the Treasury is at 2.350 that day. Add

the margin of 2.75% and this means your minimum payment rate is 5.100%.

The interest-only option for the same $300,000 loan would be $1275.

However you decide to take Option #1 that month and pay the 1.000% teaser of

$965. This means you would have “skipped out” on $310 for that month.

Banks don’t like it when you “skip out” so they simply add this to the backend of

your mortgage. You now owe them $300,310. $310 more than you

borrowed….negative amortization.

And this can go on and on.

They usually cap this at between 115-125% of the original loan amount. This

means that you cannot be into them for more than $345,000 on a loan you took

for $300,000 or they will “recast” or refigure the entire loan.

Did you get that? You borrowed $300,000 but if your loan GROWS to $345,000,

they get to automatically recast your mortgage. A “do-over” if you will. Only you

don’t get another 30-year do-over. You get whatever time you have left with a

new, much higher loan amount.

So you bought a $300,000 Pay Option mortgage amortized over 30 years with

four great payment choices but after four years they re-casted it when you got

$45,000 in the negative.

So now you get a brand-new $345,000 Pay Option mortgage with only 26 years left to pay. You can imagine what that does to your new payment.

Negative amortization can be offset by home-price appreciation. That’s another

reason why it was so popular when the market was hot.

However, if home prices drop, as they have recently, you could find yourself owing more than your home is worth.

It is far too risky for buyers to stretch to buy a home using a 1.00%

mortgage, and then make a habit of paying only the minimum amount due each

month.

Are you still with me? Barely? Well, here is where it gets really complicated….

The minimum initial payment is calculated at the interest rate in month one, and

can then, depending on the program, rise by as much as 7.5% of the start rate a year.

This means if the initial rate is 5.000%, it cannot go higher than 5.350% that year.

7.5% of the start rate, not up 7.50%.

That is the yearly cap, so you really can get hurt too bad by the payment the first few years.

While the interest rate jumps in month two, the initial payment holds for the year.

In the four years that follow, each minimum is 7.5% higher than the minimum in

the preceding year. The rate in month one therefore determines the minimum

payments for the first 5 years.

That sounds pretty good. Sounds like you can’t get crushed.

However, the rule that the minimum payment rises by no more than 7.5% a year

usually has two exceptions.

EXCEPTION #1: Every five years the payment must be “recast” to be fully

amortizing. This means if you borrowed $300,000 and you now owe $315,000

because of negative amortization, the bank gets to recalculate the minimums to

help them get caught up, like described above.

They will then recast it over the 25 years remaining regardless of how large an

increase in payment is required. At some point you have to pay

off your mortgage.

If this happens your payment is going to increase substantially, even the

minimum payments. Your loan is for 30 years and at some point you

have to pay back the principal.

Once again, if interest rates skyrocket, but you pay the minimum, you may be

going further into the negative. If they recast your loan, you

may no longer even be able to afford the “minimum” and be forced into a

refinance to keep your house. Or you may just lose it.

EXCEPTION #2: The loan balance cannot exceed a negative amortization

maximum. All of these programs have negative amortization maximums, which

range from 110% to 125% of the original loan balance.

If the balance hits the negative amortization maximum, the payment is

immediately raised to the fully amortizing level. Once again, the bank

does not want to be too far upside down. In fact, these programs usually require

a down payment of no less than 5%. More like 20% if you go with Stated

Income.

Either the recasting of the loan or the negative amortization cap can result in

serious payment shock.

I don’t want to simply paint these programs in a negative light. They have some

very real positives as well.

The main selling point is the low payment in the early years. If you plan on only

having this loan for 2-4 years it may the program for you.

However you may be able to accomplish the very same thing with a 1, 2 or 3

year interest-only ARM and not have to deal with the confusion.

Some borrowers find it an excellent way to manage money because it allows

them flexibility.

Borrowers who work on commission, or who have a lot of assets but minimal

cash flow, may appreciate the pay option programs.

It allows them to make minimal monthly payments when the cash flow is lower

and when the money starts rolling in, they can pay back deferred

interest and pay down the principal balance.

These programs are also great if you are in a transition period that will mean you

will make more money in the near future. For example, you

started a new job and know that you are getting a pay increase in the next year

or so. This allows you to get in the house you want, make a very low payment

for a few years, and then start catching up.

It’s also a great program for disciplined borrowers who want to pay off a lot of

their equity.

I had one borrower who was selling his business and wanted to pay cash for his

home with the proceeds. The sale of his business was delayed so he did this

program until the escrow on the business finally closed.

I had another borrower who wanted to pay down his house by $200,000 in the

first two years. He did not want to pay any excess interest and

this was the best means for him to accomplish that.

These programs allow borrowers to buy more costly houses, or use the monthly

payment savings to pay down other debt, improve their homes, or to use their

money for other reasons. They also give you the ultimate control over your

mortgage payment.

However, as you can tell, they are risky.

The interest rate adjusts monthly, with no limit on the size of interest rate

changes except a maximum rate over the life of the loan. The maximums

generally range from 9.95% to 12.500%.

Almost all of these programs use rate indexes that adjust slowly to market

changes. COFI is one such slow-moving index, others are COSI, CODI and MTA.

The bottom line is this….

Don’t be tricked by a low initial rate, it holds only for one to 12 months. If you

can’t afford the house without the rate being 1.000%,

you are in too much house.

An $800,000 loan at 1.000% is only around $2573/mo. That opens the door for

a lot more people to buy $1 million homes. However can you

still afford the payment if adjustments cause it to go to $4000/mo. and beyond?

Like I said, you may be better served in a short term ARM that is fixed for at least

a couple of years and does not adjust monthly. One that also

won’t ever go into negative amortization.

If you are in love with this program, please feel free to go ahead. They are

extremely popular and people are asking about them all of

the time.

However, please make sure your preferred lender understands ALL of

the details. They all get the 1.00% part. That is what they are selling.

If your lender is not well-trained in this program and he locks your margin too

high or chooses a faster-moving index it will cost you $1,000′s yearly.

If you have to explain the program to him, find another lender for this program.

Your focus should be first on the margin, because that is what really determines

your rate.

Next look at the maximum rate. Look for one under 10.000%, if available to you.

Your third priority should be total lender fees paid upfront. Lenders know you

want this program and are willing to pay for it. They may

charge more than normal.

Shop for the program that works best for you. Right now we offer many different

variations.

Banks don’t re-price these programs every day with changes in the market, as

they do with other mortgages. Take your time and shop around. You don’t have

to worry about locking these rates. They rise and drop monthly with the market

so timing it doesn’t make much sense. You should shop margins and max rates

on these.

Finally, like all loan programs, these programs come with credit restraints. If you

are planning on going Stated Income, you probably need your credit score to be

over 680 to qualify. If you can go Full Doc, 620 will usually qualify you.

If this program really interests you, you will also want to consider the Secure Option ARM. Its the same principal as above, and a little safer.

The “natural” rate is fixed for five years and your option is to pay 3%-4% less than the natural rate. For example, if the five year fixed rate is 7.000%, you have the option of paying 4.000% for up to five years, or until the loan “recasts” at 115% negative.

Once again, for every $1 you pay under the 7.000%, that amount is added to the bank end of your loan and is negative amortization.

At the time of this newsletter, the average Pay Option ARM was taking about 32 months to recast, if you make the minimum payment each month, while the Secure Option is taking about 36 months.

Related : 37 Inch http://blogiron.com/ernestopion/ http://justinholly.b2bsosick.com/

I hate getting into technical mortgage topics and this one is even confusing for

mortgage professionals.

I got so many emails asking me questions about Pay Option mortgages that I decided to go ahead and

tackle the issue. Hang on tight!!!

You have probably seen the ads on TV. “Cut your mortgage payment in HALF!!!!” Get a $200,000 mortgage for under $400 per month!!”

It almost sounds too good to be true!!!!

You have probably seen the ads in the newspaper. Even more creative, they

sound like the ANSWER to your home-buying DREAM!!

“1 Month Option ARM”, “Smart Choice,” “Smart Pay,” “Pay Option ARM,”

“Pick a Payment Loan”, “Cash Flow Option Loan.”

These are all simply well-branded names for what is known as a “flexible

payment ARM.”

They may have different rules but nearly all share the same main premise.

Lowest payment possible.

Even though you save money on monthly mortgage payments with this type of

loan, you can also lose your some of your equity.

Here is how they work. Once again, each program has slightly different

characteristics. I will discuss the characteristics of the ones of which I am most

familiar.

Let’s say you borrow $300,000. Each month you will get a mortgage statement

that gives you the choice of up to 4 different payment options. Each month YOU

choose the payment you want to make.

For example:

OPTION #1 will be the minimum payment.

This will be the lowest payment based on the Start Rate of your ARM. The first

year this option will be a “teaser rate” that is good for between one to 12 months

and be the one like 1.000%. This minimum payment will change each year.

This is the one to be careful of. Making the minimum payment each month will

very likely mean you will end up owing more than you borrowed.

When your loan is structured so that you can actually OWE more than you

borrowed it’s called NEGATIVE AMORTIZATION. More on this below.

OPTION #2 will be an interest-only payment based on the ARM of the program.

The program is usually is tied to very short-term Adjustable Rate Mortgage, like a

One or Three Month ARM. Although you get to make an interest-only payment,

plan on it adjusting regularly.

OPTION #3 will be a 15 year payment and will pay off your loan as if it were a 15

year payment schedule.

OPTION #4 will be 30 year payment and will pay off your loan at the “Fully

Indexed Rate”

Sounds great but confusing, right?

You should be confused. These programs are very complicated, which creates

an even greater danger that borrowers will take them without fully understanding

the risks.

I have had many clients come to me for refinances who are currently in these

programs from another lender. Not a single one understood the program and

they had been in it for some time.

The problem is borrowers who don’t understand these programs may someday

be in a mortgage with a payment they simply can no longer afford. They hear

“1.000%” and yell, “sign me up!!!”

The scary about these programs is the negative amortization part that the

lenders do not quite explain properly.

Let me tell you how it really works so you can see the pros and cons.

Let’s say you love Option #1 and for the first 12 months you pay the teaser rate

of 1.00%. On a $300,000 this is around $965 per month. Sorry you can’t do this

as interest-only.

When you locked the loan you did this using the Treasury as the index, and the

program has a 2.75% margin.

The margin is the single most important thing to look at when selecting a Pay

Option program. It is usually higher than the rate itself and the lender can

sometimes adjust this for you.

Let’s say when the bank sets your rate, the Treasury is at 2.350 that day. Add

the margin of 2.75% and this means your minimum payment rate is 5.100%.

The interest-only option for the same $300,000 loan would be $1275.

However you decide to take Option #1 that month and pay the 1.000% teaser of

$965. This means you would have “skipped out” on $310 for that month.

Banks don’t like it when you “skip out” so they simply add this to the backend of

your mortgage. You now owe them $300,310. $310 more than you

borrowed….negative amortization.

And this can go on and on.

They usually cap this at between 115-125% of the original loan amount. This

means that you cannot be into them for more than $345,000 on a loan you took

for $300,000 or they will “recast” or refigure the entire loan.

Did you get that? You borrowed $300,000 but if your loan GROWS to $345,000,

they get to automatically recast your mortgage. A “do-over” if you will. Only you

don’t get another 30-year do-over. You get whatever time you have left with a

new, much higher loan amount.

So you bought a $300,000 Pay Option mortgage amortized over 30 years with

four great payment choices but after four years they re-casted it when you got

$45,000 in the negative.

So now you get a brand-new $345,000 Pay Option mortgage with only 26 years left to pay. You can imagine what that does to your new payment.

Negative amortization can be offset by home-price appreciation. That’s another

reason why it was so popular when the market was hot.

However, if home prices drop, as they have recently, you could find yourself owing more than your home is worth.

It is far too risky for buyers to stretch to buy a home using a 1.00%

mortgage, and then make a habit of paying only the minimum amount due each

month.

Are you still with me? Barely? Well, here is where it gets really complicated….

The minimum initial payment is calculated at the interest rate in month one, and

can then, depending on the program, rise by as much as 7.5% of the start rate a year.

This means if the initial rate is 5.000%, it cannot go higher than 5.350% that year.

7.5% of the start rate, not up 7.50%.

That is the yearly cap, so you really can get hurt too bad by the payment the first few years.

While the interest rate jumps in month two, the initial payment holds for the year.

In the four years that follow, each minimum is 7.5% higher than the minimum in

the preceding year. The rate in month one therefore determines the minimum

payments for the first 5 years.

That sounds pretty good. Sounds like you can’t get crushed.

However, the rule that the minimum payment rises by no more than 7.5% a year

usually has two exceptions.

EXCEPTION #1: Every five years the payment must be “recast” to be fully

amortizing. This means if you borrowed $300,000 and you now owe $315,000

because of negative amortization, the bank gets to recalculate the minimums to

help them get caught up, like described above.

They will then recast it over the 25 years remaining regardless of how large an

increase in payment is required. At some point you have to pay

off your mortgage.

If this happens your payment is going to increase substantially, even the

minimum payments. Your loan is for 30 years and at some point you

have to pay back the principal.

Once again, if interest rates skyrocket, but you pay the minimum, you may be

going further into the negative. If they recast your loan, you

may no longer even be able to afford the “minimum” and be forced into a

refinance to keep your house. Or you may just lose it.

EXCEPTION #2: The loan balance cannot exceed a negative amortization

maximum. All of these programs have negative amortization maximums, which

range from 110% to 125% of the original loan balance.

If the balance hits the negative amortization maximum, the payment is

immediately raised to the fully amortizing level. Once again, the bank

does not want to be too far upside down. In fact, these programs usually require

a down payment of no less than 5%. More like 20% if you go with Stated

Income.

Either the recasting of the loan or the negative amortization cap can result in

serious payment shock.

I don’t want to simply paint these programs in a negative light. They have some

very real positives as well.

The main selling point is the low payment in the early years. If you plan on only

having this loan for 2-4 years it may the program for you.

However you may be able to accomplish the very same thing with a 1, 2 or 3

year interest-only ARM and not have to deal with the confusion.

Some borrowers find it an excellent way to manage money because it allows

them flexibility.

Borrowers who work on commission, or who have a lot of assets but minimal

cash flow, may appreciate the pay option programs.

It allows them to make minimal monthly payments when the cash flow is lower

and when the money starts rolling in, they can pay back deferred

interest and pay down the principal balance.

These programs are also great if you are in a transition period that will mean you

will make more money in the near future. For example, you

started a new job and know that you are getting a pay increase in the next year

or so. This allows you to get in the house you want, make a very low payment

for a few years, and then start catching up.

It’s also a great program for disciplined borrowers who want to pay off a lot of

their equity.

I had one borrower who was selling his business and wanted to pay cash for his

home with the proceeds. The sale of his business was delayed so he did this

program until the escrow on the business finally closed.

I had another borrower who wanted to pay down his house by $200,000 in the

first two years. He did not want to pay any excess interest and

this was the best means for him to accomplish that.

These programs allow borrowers to buy more costly houses, or use the monthly

payment savings to pay down other debt, improve their homes, or to use their

money for other reasons. They also give you the ultimate control over your

mortgage payment.

However, as you can tell, they are risky.

The interest rate adjusts monthly, with no limit on the size of interest rate

changes except a maximum rate over the life of the loan. The maximums

generally range from 9.95% to 12.500%.

Almost all of these programs use rate indexes that adjust slowly to market

changes. COFI is one such slow-moving index, others are COSI, CODI and MTA.

The bottom line is this….

Don’t be tricked by a low initial rate, it holds only for one to 12 months. If you

can’t afford the house without the rate being 1.000%,

you are in too much house.

An $800,000 loan at 1.000% is only around $2573/mo. That opens the door for

a lot more people to buy $1 million homes. However can you

still afford the payment if adjustments cause it to go to $4000/mo. and beyond?

Like I said, you may be better served in a short term ARM that is fixed for at least

a couple of years and does not adjust monthly. One that also

won’t ever go into negative amortization.

If you are in love with this program, please feel free to go ahead. They are

extremely popular and people are asking about them all of

the time.

However, please make sure your preferred lender understands ALL of

the details. They all get the 1.00% part. That is what they are selling.

If your lender is not well-trained in this program and he locks your margin too

high or chooses a faster-moving index it will cost you $1,000′s yearly.

If you have to explain the program to him, find another lender for this program.

Your focus should be first on the margin, because that is what really determines

your rate.

Next look at the maximum rate. Look for one under 10.000%, if available to you.

Your third priority should be total lender fees paid upfront. Lenders know you

want this program and are willing to pay for it. They may

charge more than normal.

Shop for the program that works best for you. Right now we offer many different

variations.

Banks don’t re-price these programs every day with changes in the market, as

they do with other mortgages. Take your time and shop around. You don’t have

to worry about locking these rates. They rise and drop monthly with the market

so timing it doesn’t make much sense. You should shop margins and max rates

on these.

Finally, like all loan programs, these programs come with credit restraints. If you

are planning on going Stated Income, you probably need your credit score to be

over 680 to qualify. If you can go Full Doc, 620 will usually qualify you.

If this program really interests you, you will also want to consider the Secure Option ARM. Its the same principal as above, and a little safer.

The “natural” rate is fixed for five years and your option is to pay 3%-4% less than the natural rate. For example, if the five year fixed rate is 7.000%, you have the option of paying 4.000% for up to five years, or until the loan “recasts” at 115% negative.

Once again, for every $1 you pay under the 7.000%, that amount is added to the bank end of your loan and is negative amortization.

At the time of this newsletter, the average Pay Option ARM was taking about 32 months to recast, if you make the minimum payment each month, while the Secure Option is taking about 36 months.

Thanks To : Buy Palmolive Soap http://diannesturgis.indiyaa.org/

Image : http://www.flickr.com

There’s an important lesson all wealthy people understand: No one ever got rich just by saving money. Or, put another way, paying off debt is not the same as accumulating assets. I stress this because many people think they will be better off financially if they eliminate their mortgage. But this is not automatically true. Despite the fact that millions of Americans believe this to be true, does not make it true as many have been ill advised and you need to know why.

It was once rational to fear your mortgage. Mortgage-anxiety, is rooted in a harmful event referred to as a “mortgage call.” This contract provision allowed banks to call a loan due in full, at anytime, without cause and with only thirty days notice! During the Great Depression, banks called countless loans due in a desperate attempt to recapitalize. Consequently, few people could respond with the cash for the entire loan and the banks foreclosed on millions of homeowners regardless of whether or not payments were current. Fortunately, the banking industry abandoned this “Call” feature decades ago. Despite protective mechanisms in place to avoid a similar event and the passage of some seventy years, Mortgage-anxiety remains and seems to be passed on from generation to generation like tradition. My parents paid off their home in time for retirement so I must do the same is the thinking. Never mind the lack of money to live on and the loss of tax deductions to offset retirement income that is taxed as ordinary income. Does this really sound like a wise proposal to aspire to?

Today the mortgage industry has tools to create wealth like never before, the sophisticated consumer demands nothing less. There are a number of Pick-a-payment Mortgages (aka Option Arms) that create opportunity when used with confidence and purpose. This type of mortgage product allows you to choose between four payment options each month. The options are a 30-year payment, a 15-year payment, interest only or minimum monthly payment, which has a low start rate (currently 1.0 % to 4.95% depending on the homeowner’s, credit, income and other market factors). You can match your loan payments to your variable or seasonal income and begin using the saved income to create wealth. They even have 40-year payment plans but these need to be evaluated carefully as sometimes these products have been proven to be nothing more than hype with no real planning efficacy.

Options Arms use a monthly Adjustable Rate concept to determine the actual rate of interest charged. The loan is linked to one of various indexes like the Cost of Funds Index (COFI), Certificate of Deposit Index (CODI), and Cost of Savings Index (COSI) which are cost indexes and less volatile as opposed to the Monthly Treasury Average (MTA), or the London Interbank Offered Rate (LIBOR) which are market indexes and subject to the volatility of the market. A loan consultant can determine the index and program that best fits your individual financial situation. Fixed percentage points (the “Margin”) are added to the index and establishes your effective interest rate and monthly payment. It is wise to understand the recast period and note rider because using the minimum payment defers interest and principal and increases the size of the loan. Many foolish advisors are putting people on the wrong index or with the wrong bank because they don’t know enough to examine the note riders. Fortunately, I’ve had the ability to create proprietary loan products that are designed specifically for our clients that slows down the acceleration of recast. Many advisors only have what is common and on the shelf to plan with.

In looking at our clients there appears to be two types that hate mortgages: those who fear them and those who believe that mortgages cost them huge amounts of money in interest charges. We’ve already resolved the fear issue, so let me dismiss the myths surrounding the interest question.

Carrying a mortgage does not cause you to lose any money at all. In fact, just the opposite is true: carrying a mortgage can be quite profitable, while eliminating the mortgage can force you to give up profitable opportunities. If you value asset protection you’ll get the equity out of your home and place it where it is not desirable for a creditor to access it.

This second group of people, the ones who hate rather than fear mortgages, hate them because they know over the life of a 30-year loan; they will spend much more on interest than the purchase price of the house.

EXAMPLE:

Jane is going with a 30-year loan; she will spend nearly $159,000 in interest (plus $120,000 in principal) on a house that cost $120,000. You want to save money in interest, so to minimize your costs; you take all the steps to pay the mortgage off early. Then, with that issue resolved you start to focus on retirement and do your best to save regularly. As a result, you’ll fail to accumulate wealth and can’t figure out why.

The reason is simple but not often clear. By tackling the mortgage issue first and your retirement goals second; you fail to consider the role that a mortgage plays in building wealth. You won the battle to reduce interest but the wealth accumulation war is lost.

Here’s why!

You know that by reducing the mortgage payment, or even paying off the mortgage completely, you save lots of money in interest charges. While that is correct, you are ignoring another, equally critical fact: Every extra dollar you give the bank on principal, is a dollar you did not invest.

This is a critical point. Mortgages today cost 7.5% to 8.5% (depends on credit score). Over the next 30 years, on an average annual basis, can investments earn at least that much? Absolutely. Even long-term government bonds pay nearly that amount, and non-speculative stocks have been averaging 11.2% since 1926, with the exception of a few recent years. But giving your money to the bank to avoid a 7% to 8% simple interest charge denies yourself the opportunity to invest that money where it might earn 9 to 10% tax deferred at compound interest. Therefore, by looking at individual trees, you fail to see the forest because simple interest and compound interest carry very different results over time.

EXAMPLE:

Rob has a low rate $132,000 first mortgage on his home that is worth $285,000 dollars. Since Rob works with a professional advisor, he decided to get a home equity line (HELOC) for $70,000 at 5% and invest it through his advisor in a tax advantaged savings account with a guaranteed product that has consistently produced at least a 8% growth annually and has principal protection. The $70,000 investment with an 8%+ override will make a significant contribution to Rob’s retirement, especially once compound interest kicks in. Even if your borrowed mortgage money is 8%, you’ll win every time if you understand the economics.

The irony is that some people feel they are making a good “investment” by paying off their home loan. You need to remember that your home will grow in value over the next 30 years (national average is over 6% per year), whether you have a mortgage or not.

Think about it. When you sell your house, does any buyer care what your mortgage balance is? Of course not. Neither does the IRS when you calculate your taxable gain or loss. The simple truth is that mortgages do not affect home values.

Therefore, you have a choice. You can pay cash to buy a $200,000 house, enabling you to own it outright, or you can buy that house with 20% down. Let’s explore each of these scenarios and see which is better at helping you achieve your true goal of accumulating wealth.

Tale of Two Sisters – Julia and Jean.

Julia just received $200,000 from the sale of her prior house. Or maybe she exercised some stock options, or got an inheritance, or received an insurance settlement. It doesn’t matter where the money came from. The point is, she has money and wants to buy a new home which costs $200,000. Julia decides to pay cash for the house. This takes all her cash, but it lets her avoid mortgage payments. In 30 years, her house will be worth $600,000, assuming it grows at the rate of only 3.5% per year. Pretty smart, she figures.

However, Jean takes a different approach. Jean too has $200,000 in cash and she also wants to buy a $200,000 house, But Jean puts down only 20%, or $40,000, obtaining a $160,000 mortgage. The monthly payment could be as low as $587.00 $1,064, but it really costs Jean less than that because the mortgage interest is tax-deductible (something Julia failed to consider), and the tax savings reduce her monthly mortgage bill by $240, making her net payment just $824 per month. Alternatively, Jean could choose to make a minimum payment of $587.40.

To help make those monthly payments Jean invests the remaining $160,000 she didn’t give the bank, and earns 10% per year on her money. Yes, she has to pay taxes on those profits and she does – but at the 20% long-term capital gains rate, not the 28% ordinary income tax rate.

Thus, Jean earns a monthly after-tax return of $1,067. After paying for the loan, she’s got $243 per month left over, which she reinvests. After 30 years, Jean (like Julia) has a house worth $600,000 (and, like Julia, it’s fully paid for by then). And that’s not all. Jean also still has her original $160,000 as well as another $550,000 from investing $243 per month over 30 years. So, while Julia has a home worth $600,000, Jean has a similar home plus $710,000 in cash from investments.

Julia figured that getting a mortgage was one thing and tax preparation another – so she failed to consider both issues simultaneously to her detriment. This fact saved Jean another 8% because she paid taxes at the 20% rate while Julia paid her taxes at the 28% rate!

Julia wanted to avoid the expenses of a mortgage. Jean wanted to accumulate wealth – and if doing so meant carrying a mortgage, Jean was willing to do it. The result? Jean’s net worth is $1,310,000–more than twice as much as Julia’s!

So don’t fret about all the interest. Focus instead on investing and all the money you’re able to earn as a result of not giving all your money to the bank. But if this monthly payment is still bothering you, let’s do some time traveling. You’ll see how much FUN it is to carry a mortgage. In 1970, homes cost an average of $23,400 and 30-year fixed-rate mortgage was 6%. The monthly payment, assuming no money down: $140.

Also, remember that the average monthly income back then was just $646. In other words, that $140 mortgage was as challenging to people then as your $1,000, payment is to you now. And in 20 years, you’ll be teasing your kids about your “low” payment because incomes and housing prices will be much higher – just as today’s wages and prices are much higher than those in 1970!

It’s also very important to remember that mortgage payments get cheaper over time (even though they never actually change), because the payment amounts are fixed while your income grows. So don’t worry about your big payment. It won’t seem big forever.

For all these reasons, the 30-year mortgage is better than one that you pay off in just 15 years (or a 40 year could be better than a 30 year). It also explains why bi¬weekly mortgage plans are not great ideas unless you insist on paying the mortgage early! You see, the more you pay in principal and the quicker you pay off your loan, the less you have to invest. If you don’t know how long you’re going to be in the property and have an eye on moving up, you should use a tool that allows you to make a minimum payment.

NOTE: Some readers will be skeptical of this example. They will claim that Julia can invest $824 per month more than Jean, because Jean is making a mortgage payment that Julia has avoided, and that this advantage will enable Julia to accumulate more money than Jean over 30 years. Sorry, but that’s not true. Even though Julia can invest $824 per month, Jean gets to invest $160,000 right now. And the results: By investing $824 per month at 10% per year for 30 years, Julia would have $1.86 million. But by investing $160,000 today for the next 30 years, also at 10% per year, Jean will have $3.17 million – far more than Julia will. No matter how you handle it, carrying a mortgage enables you to produce greater wealth.

So, Lets Review…

1) You get no tax break when paying the bank principal. You save on taxes only when you pay interest or if using a minimum payment with a Pick-a-Payment mortgage, the imputed interest.

2) Money you invest is taxed at a lower rate than your savings from tax-deductible interest. Therefore, you want to maximize your interest payment while minimizing your principal payment.

3) Money you give to the bank is money you’ll never see again–unless you refinance. If you think this notion is evident, thousands of consumers report that the reason they’re hurrying to pay off their mortgages is so they’ll be able to borrow against the equity later to pay their kids’ college tuition. Talk about a wacky strategy! These folks are struggling to give the bank all their money now merely so they can borrow it in the future! They should be investing their cash to earn competitive returns, eliminate inclusion by financial aid at the college (certain assets are outside the inclusion formulas) that remains available for use whenever needed?

4) You don’t earn any interest on your equity and when you need it, it might not be available to you. If you ever suffer a job loss, major medical, home destruction (Katrina) or other financial crisis, you could find yourself unable to get a home loan. That’s because lenders don’t like to lend money if you are in financial difficulty. It is really more conservative to get a big mortgage now, before you need it – while you still can.

5) The best way to achieve a “free & clear” title, if you really want it, is by mortgaging your home to the maximum allowable by your income. Increasing the loan, investing the equity and then accumulating enough to pay off the debt is possibly the quickest method to eliminate a mortgage. Modest assumptions show it to be much faster than a 15-year mortgage that sends more money to the bank.

6) Mortgages don’t lower home values. Your house will grow in value (or not) whether or not you have a mortgage. In fact, most people discover that, over time, their mortgage balance falls while their home value rises – creating substantial wealth they never expected.

7) Your mortgage is the cheapest money you’ll ever buy. Most people need to borrow money during their lives, so why pay 22% to credit cards when you can borrow at rates of 8% or even less? Using this money for investments, not speculation like the stock market will allow you to arbitrage these dollars. When you consider what an effective interest rate is and place that side-by-side with compound interest, you can win every time even if you only earn less on the money than you pay for it initially. In other words, the simple interest on the lending side will be defeated by the compound interest on the investing side over time.

If nothing else convinces you, consider this: my clients are among the most financially successful Americans. They carry a mortgage confidently and with purpose. If you want to build wealth like they do, it’s time you start managing your money the way they do. Starting with your mortgage.

The Critical Component!

You can see the path – but how do you get there? It’s available, but it takes SELF -DISCIPLINE and a financial strategy, plus high-quality investment advice.

“The Best Rate on the Wrong Strategy Can Cost As Much Money as a Bad Rate”

If you don’t have an asset protection and financial strategy using your mortgage, we invite you to contact Legal Wealth Conduit and start strategically planning your future and your retirement.

James Burns

Attorney at Law

Legal Wealth Conduit

“Private Client Services”

18662 MacArthur Blvd.,

2nd Floor

Irvine, CA. 92612

www.houseofdollars.com

PH: (949) 440-3243

Fax: (714) 464-4448

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There’s an important lesson all wealthy people understand: No one ever got rich just by saving money. Or, put another way, paying off debt is not the same as accumulating assets. I stress this because many people think they will be better off financially if they eliminate their mortgage. But this is not automatically true. Despite the fact that millions of Americans believe this to be true, does not make it true as many have been ill advised and you need to know why.

It was once rational to fear your mortgage. Mortgage-anxiety, is rooted in a harmful event referred to as a “mortgage call.” This contract provision allowed banks to call a loan due in full, at anytime, without cause and with only thirty days notice! During the Great Depression, banks called countless loans due in a desperate attempt to recapitalize. Consequently, few people could respond with the cash for the entire loan and the banks foreclosed on millions of homeowners regardless of whether or not payments were current. Fortunately, the banking industry abandoned this “Call” feature decades ago. Despite protective mechanisms in place to avoid a similar event and the passage of some seventy years, Mortgage-anxiety remains and seems to be passed on from generation to generation like tradition. My parents paid off their home in time for retirement so I must do the same is the thinking. Never mind the lack of money to live on and the loss of tax deductions to offset retirement income that is taxed as ordinary income. Does this really sound like a wise proposal to aspire to?

Today the mortgage industry has tools to create wealth like never before, the sophisticated consumer demands nothing less. There are a number of Pick-a-payment Mortgages (aka Option Arms) that create opportunity when used with confidence and purpose. This type of mortgage product allows you to choose between four payment options each month. The options are a 30-year payment, a 15-year payment, interest only or minimum monthly payment, which has a low start rate (currently 1.0 % to 4.95% depending on the homeowner’s, credit, income and other market factors). You can match your loan payments to your variable or seasonal income and begin using the saved income to create wealth. They even have 40-year payment plans but these need to be evaluated carefully as sometimes these products have been proven to be nothing more than hype with no real planning efficacy.

Options Arms use a monthly Adjustable Rate concept to determine the actual rate of interest charged. The loan is linked to one of various indexes like the Cost of Funds Index (COFI), Certificate of Deposit Index (CODI), and Cost of Savings Index (COSI) which are cost indexes and less volatile as opposed to the Monthly Treasury Average (MTA), or the London Interbank Offered Rate (LIBOR) which are market indexes and subject to the volatility of the market. A loan consultant can determine the index and program that best fits your individual financial situation. Fixed percentage points (the “Margin”) are added to the index and establishes your effective interest rate and monthly payment. It is wise to understand the recast period and note rider because using the minimum payment defers interest and principal and increases the size of the loan. Many foolish advisors are putting people on the wrong index or with the wrong bank because they don’t know enough to examine the note riders. Fortunately, I’ve had the ability to create proprietary loan products that are designed specifically for our clients that slows down the acceleration of recast. Many advisors only have what is common and on the shelf to plan with.

In looking at our clients there appears to be two types that hate mortgages: those who fear them and those who believe that mortgages cost them huge amounts of money in interest charges. We’ve already resolved the fear issue, so let me dismiss the myths surrounding the interest question.

Carrying a mortgage does not cause you to lose any money at all. In fact, just the opposite is true: carrying a mortgage can be quite profitable, while eliminating the mortgage can force you to give up profitable opportunities. If you value asset protection you’ll get the equity out of your home and place it where it is not desirable for a creditor to access it.

This second group of people, the ones who hate rather than fear mortgages, hate them because they know over the life of a 30-year loan; they will spend much more on interest than the purchase price of the house.

EXAMPLE:

Jane is going with a 30-year loan; she will spend nearly $159,000 in interest (plus $120,000 in principal) on a house that cost $120,000. You want to save money in interest, so to minimize your costs; you take all the steps to pay the mortgage off early. Then, with that issue resolved you start to focus on retirement and do your best to save regularly. As a result, you’ll fail to accumulate wealth and can’t figure out why.

The reason is simple but not often clear. By tackling the mortgage issue first and your retirement goals second; you fail to consider the role that a mortgage plays in building wealth. You won the battle to reduce interest but the wealth accumulation war is lost.

Here’s why!

You know that by reducing the mortgage payment, or even paying off the mortgage completely, you save lots of money in interest charges. While that is correct, you are ignoring another, equally critical fact: Every extra dollar you give the bank on principal, is a dollar you did not invest.

This is a critical point. Mortgages today cost 7.5% to 8.5% (depends on credit score). Over the next 30 years, on an average annual basis, can investments earn at least that much? Absolutely. Even long-term government bonds pay nearly that amount, and non-speculative stocks have been averaging 11.2% since 1926, with the exception of a few recent years. But giving your money to the bank to avoid a 7% to 8% simple interest charge denies yourself the opportunity to invest that money where it might earn 9 to 10% tax deferred at compound interest. Therefore, by looking at individual trees, you fail to see the forest because simple interest and compound interest carry very different results over time.

EXAMPLE:

Rob has a low rate $132,000 first mortgage on his home that is worth $285,000 dollars. Since Rob works with a professional advisor, he decided to get a home equity line (HELOC) for $70,000 at 5% and invest it through his advisor in a tax advantaged savings account with a guaranteed product that has consistently produced at least a 8% growth annually and has principal protection. The $70,000 investment with an 8%+ override will make a significant contribution to Rob’s retirement, especially once compound interest kicks in. Even if your borrowed mortgage money is 8%, you’ll win every time if you understand the economics.

The irony is that some people feel they are making a good “investment” by paying off their home loan. You need to remember that your home will grow in value over the next 30 years (national average is over 6% per year), whether you have a mortgage or not.

Think about it. When you sell your house, does any buyer care what your mortgage balance is? Of course not. Neither does the IRS when you calculate your taxable gain or loss. The simple truth is that mortgages do not affect home values.

Therefore, you have a choice. You can pay cash to buy a $200,000 house, enabling you to own it outright, or you can buy that house with 20% down. Let’s explore each of these scenarios and see which is better at helping you achieve your true goal of accumulating wealth.

Tale of Two Sisters – Julia and Jean.

Julia just received $200,000 from the sale of her prior house. Or maybe she exercised some stock options, or got an inheritance, or received an insurance settlement. It doesn’t matter where the money came from. The point is, she has money and wants to buy a new home which costs $200,000. Julia decides to pay cash for the house. This takes all her cash, but it lets her avoid mortgage payments. In 30 years, her house will be worth $600,000, assuming it grows at the rate of only 3.5% per year. Pretty smart, she figures.

However, Jean takes a different approach. Jean too has $200,000 in cash and she also wants to buy a $200,000 house, But Jean puts down only 20%, or $40,000, obtaining a $160,000 mortgage. The monthly payment could be as low as $587.00 $1,064, but it really costs Jean less than that because the mortgage interest is tax-deductible (something Julia failed to consider), and the tax savings reduce her monthly mortgage bill by $240, making her net payment just $824 per month. Alternatively, Jean could choose to make a minimum payment of $587.40.

To help make those monthly payments Jean invests the remaining $160,000 she didn’t give the bank, and earns 10% per year on her money. Yes, she has to pay taxes on those profits and she does – but at the 20% long-term capital gains rate, not the 28% ordinary income tax rate.

Thus, Jean earns a monthly after-tax return of $1,067. After paying for the loan, she’s got $243 per month left over, which she reinvests. After 30 years, Jean (like Julia) has a house worth $600,000 (and, like Julia, it’s fully paid for by then). And that’s not all. Jean also still has her original $160,000 as well as another $550,000 from investing $243 per month over 30 years. So, while Julia has a home worth $600,000, Jean has a similar home plus $710,000 in cash from investments.

Julia figured that getting a mortgage was one thing and tax preparation another – so she failed to consider both issues simultaneously to her detriment. This fact saved Jean another 8% because she paid taxes at the 20% rate while Julia paid her taxes at the 28% rate!

Julia wanted to avoid the expenses of a mortgage. Jean wanted to accumulate wealth – and if doing so meant carrying a mortgage, Jean was willing to do it. The result? Jean’s net worth is $1,310,000–more than twice as much as Julia’s!

So don’t fret about all the interest. Focus instead on investing and all the money you’re able to earn as a result of not giving all your money to the bank. But if this monthly payment is still bothering you, let’s do some time traveling. You’ll see how much FUN it is to carry a mortgage. In 1970, homes cost an average of $23,400 and 30-year fixed-rate mortgage was 6%. The monthly payment, assuming no money down: $140.

Also, remember that the average monthly income back then was just $646. In other words, that $140 mortgage was as challenging to people then as your $1,000, payment is to you now. And in 20 years, you’ll be teasing your kids about your “low” payment because incomes and housing prices will be much higher – just as today’s wages and prices are much higher than those in 1970!

It’s also very important to remember that mortgage payments get cheaper over time (even though they never actually change), because the payment amounts are fixed while your income grows. So don’t worry about your big payment. It won’t seem big forever.

For all these reasons, the 30-year mortgage is better than one that you pay off in just 15 years (or a 40 year could be better than a 30 year). It also explains why bi¬weekly mortgage plans are not great ideas unless you insist on paying the mortgage early! You see, the more you pay in principal and the quicker you pay off your loan, the less you have to invest. If you don’t know how long you’re going to be in the property and have an eye on moving up, you should use a tool that allows you to make a minimum payment.

NOTE: Some readers will be skeptical of this example. They will claim that Julia can invest $824 per month more than Jean, because Jean is making a mortgage payment that Julia has avoided, and that this advantage will enable Julia to accumulate more money than Jean over 30 years. Sorry, but that’s not true. Even though Julia can invest $824 per month, Jean gets to invest $160,000 right now. And the results: By investing $824 per month at 10% per year for 30 years, Julia would have $1.86 million. But by investing $160,000 today for the next 30 years, also at 10% per year, Jean will have $3.17 million – far more than Julia will. No matter how you handle it, carrying a mortgage enables you to produce greater wealth.

So, Lets Review…

1) You get no tax break when paying the bank principal. You save on taxes only when you pay interest or if using a minimum payment with a Pick-a-Payment mortgage, the imputed interest.

2) Money you invest is taxed at a lower rate than your savings from tax-deductible interest. Therefore, you want to maximize your interest payment while minimizing your principal payment.

3) Money you give to the bank is money you’ll never see again–unless you refinance. If you think this notion is evident, thousands of consumers report that the reason they’re hurrying to pay off their mortgages is so they’ll be able to borrow against the equity later to pay their kids’ college tuition. Talk about a wacky strategy! These folks are struggling to give the bank all their money now merely so they can borrow it in the future! They should be investing their cash to earn competitive returns, eliminate inclusion by financial aid at the college (certain assets are outside the inclusion formulas) that remains available for use whenever needed?

4) You don’t earn any interest on your equity and when you need it, it might not be available to you. If you ever suffer a job loss, major medical, home destruction (Katrina) or other financial crisis, you could find yourself unable to get a home loan. That’s because lenders don’t like to lend money if you are in financial difficulty. It is really more conservative to get a big mortgage now, before you need it – while you still can.

5) The best way to achieve a “free & clear” title, if you really want it, is by mortgaging your home to the maximum allowable by your income. Increasing the loan, investing the equity and then accumulating enough to pay off the debt is possibly the quickest method to eliminate a mortgage. Modest assumptions show it to be much faster than a 15-year mortgage that sends more money to the bank.

6) Mortgages don’t lower home values. Your house will grow in value (or not) whether or not you have a mortgage. In fact, most people discover that, over time, their mortgage balance falls while their home value rises – creating substantial wealth they never expected.

7) Your mortgage is the cheapest money you’ll ever buy. Most people need to borrow money during their lives, so why pay 22% to credit cards when you can borrow at rates of 8% or even less? Using this money for investments, not speculation like the stock market will allow you to arbitrage these dollars. When you consider what an effective interest rate is and place that side-by-side with compound interest, you can win every time even if you only earn less on the money than you pay for it initially. In other words, the simple interest on the lending side will be defeated by the compound interest on the investing side over time.

If nothing else convinces you, consider this: my clients are among the most financially successful Americans. They carry a mortgage confidently and with purpose. If you want to build wealth like they do, it’s time you start managing your money the way they do. Starting with your mortgage.

The Critical Component!

You can see the path – but how do you get there? It’s available, but it takes SELF -DISCIPLINE and a financial strategy, plus high-quality investment advice.

“The Best Rate on the Wrong Strategy Can Cost As Much Money as a Bad Rate”

If you don’t have an asset protection and financial strategy using your mortgage, we invite you to contact Legal Wealth Conduit and start strategically planning your future and your retirement.

James Burns

Attorney at Law

Legal Wealth Conduit

“Private Client Services”

18662 MacArthur Blvd.,

2nd Floor

Irvine, CA. 92612

www.houseofdollars.com

PH: (949) 440-3243

Fax: (714) 464-4448

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An adjustable rate mortgage, more commonly referred to as an ARM loan, is simply a mortgage loan that has an interest rate that is usually fixed for a short period of time and then after that specified period of time is up the interest rate will adjust normally every 6 or every 12 months. How much the interest rate can adjust is determined by your ARM loan CAPS. Most adjustable rate mortgage loans have 2 different types of CAPS. The first CAP is a lifetime CAP. A common lifetime CAP is that your interest rate can not go any higher than 6% of your start rate. This means that if you obtain an ARM loan with an initial rate of 5% that your rate over the life of your loan can never exceed 11% (5% start rate + 6% CAP). The next time of CAP is an adjustment CAP. An adjustment CAP dictates the most that a rate can increase each adjustment period. For example, a common adjustment CAP is 2%. This means that each time your rate adjusts that you rate can not increase by anymore than 2%. So if you had a 5% initial interest rate, then your first adjustment could not increase your rate any higher than 2% for a 7% maximum. Therefore, you can see why it is extremely important to pay attention to the rate CAPS so that you know how much your rate and payment could end up at after the initial short term fixed period of your ARM loan.

ARM loan rates are made up of 2 items, the rate index and the rate margin. Your rate index is the adjustable portion of your rate and this is what determines whether your mortgage rate will increase, decrease or stay the same. Some examples of possible rate indexes are Prime (the most common in US), LIBOR (London InterBank Offered Rate), MTA (12 Month Treasury Average), COSI (Cost of Savings Index), COFI (11th District Cost of Funds Index), CODI (Certificate of Deposit Index), CMT (Constant Maturity Treasury), and there are others as well. These indexes fluctuate with the various market conditions and will be the main factor in determining what your ARM loan rate does. The other part of an ARM loan rate is the margin. Your margin is the fixed portion of your interest rate. Many ARM loans have margins that are between 1 and 2 percent. Some ARM loans have considerably higher margins. The lower your margin, the better it is for you and your margin never changes over the life of your loan. For example is you have an ARM loan and your index is 4% and your margin is 2%, this would give you a fully indexed rate of 6% and this is how an Adjustable Rate is calculated.

Therefore, there are certain items that you need to pay specific attention to when dealing with a mortgage loan such as the start rate, the index, the margin, the lifetime CAP and the per adjustment CAP. Knowing and understanding these items will help you to make a more educated decision when obtaining or considering an ARM loan. Look over your options and ask to see quotes for an ARM loan and a fixed rate loan to make sure there is a big enough difference in the adjustable rate to take on the added risk of an ARM.

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The importance of doing what you love, is one that is embraced by virtually all of this era’s most prominent personal and spiritual growth authors. In fact, the adage “do what you love and the money will follow” is very commonly known, but just why is this so? In response to this question consider the following passage from Arnold Patent’s book You Can Have It All:

“When you choose to make doing what you love the core experience of your life, you move into alignment with the Universe. Immediately, the infinite supply of energy is available to you. You feel the aliveness that comes from having the unlimited energy of the Universe flow through you. This aliveness influences the energy signals you emit, and the people and circumstances that will support the continuation of your feeling of aliveness are attracted to you.”

Stop for a moment and think about something that you really love to do. Now get in touch with the feelings that you normally experience while doing this activity. Assuming you were able to identify such a pursuit, it is likely that you would typically experience at least three distinct feelings — a feeling of joy or bliss, a feeling of being in the flow, (a.k.a. effortless accomplishment), and a feeling of time literally standing still as you instinctively stay focused in the present moment. As the preceding passage from Mr. Patent infers, these feelings arise because you are effectively tapping into the energy of your Higher Self, or to put it another way, you are allowing the limitless ‘I’ within you to express itself instead of your fearful, self-conscious ‘me.’

These times are very magical, because they give you an opportunity to step outside of your active conscious mind and truly become a channel for the Divine. It really is an exhilarating feeling, because you are not really thinking about what you’re doing, but rather you are feeling it. In my case, I always experience such sensations whenever I am presented with the chance to deliver a presentation to a live audience. There is nothing else in the world that I love doing more. It really is an amazing experience, as the words flow from me without any overt conscious effort on my part. By the time it’s all over, I am actually hard pressed to explain the origin of the information that I shared.

The reality is that you, as well as every other person in the world, have unique, innate skills that crave to be expressed. While you may doubt this to be true, remember that the God-Force literally threw away the blueprint when you were created, so there is no one in this entire world who can express themselves in exactly the same way. Others might argue that there was no way that anyone would pay them for doing what they love, or that there aren’t enough opportunities available in their area of interest. In response to that, consider this next quotation from Dr. Wayne Dyer’s book You’ll See It When You Believe It:

“There is no scarcity of opportunity to make a living at what you love, there is only scarcity of resolve to make it happen. Whatever you love doing more than anything else has built within it an opportunity to make a living at it, even though you may not believe it. Your fears of doing what you truly love are based on a belief that you are going to go broke and be unable to pay your bills and meet your family responsibilities. Not so! – If you have always paid your bills, why would you suddenly become the kind of person who does not?”

As mentioned earlier, once you do make the decision to do what you love to do, you move into right alignment with the Universe. This in turn, opens the door for all kinds of new energies and opportunities to migrate towards you. The reason is simple, as you do what you love, you emit a positive energy that will attract the necessary people and circumstances to assist you on your path. As for concerns about meeting your financial obligations, Dyer is right. If you have always been a responsible person, why all of a sudden would you become irresponsible? I have certainly found this to be true. Once I made the commitment to doing the work I love (i.e., inspirational writing and speaking), seemingly out of nowhere people began to show up to help me, and opportunities to earn money arrived unexpectedly as well.

If you are still unconvinced regarding this concept of doing what you love, then take a closer look at just what you are accomplishing by spending your time doing work you dislike, just to pay the bills. By remaining in this type of situation, what you are effectively doing is focusing your powerful thought and feeling energy on something that you clearly don’t like, and the ultimate result will be your attraction of more of the same. On the contrary, if you use that energy to vividly picture yourself spending time doing what you really love – and remain focused on that picture – you very well might find yourself doing it one day.

If you are a person that simply cannot envision yourself feeling comfortable about leaving a so-called secure position to do what you love, then it is truly critical for you to develop a different attitude regarding your existing employment. For example, consider using the following affirmation each day prior to heading off to work: “I do what I love, and I love what I do.”

When I initially heard this recommendation during a live presentation given by Dr. Wayne Dyer, it sounded a bit too simplistic to me. But, based on my own experience in applying it over time, I can genuinely say that when it is used with an open mind, it can really help to improve the circumstances of one’s existing employment.

In my case, I used that affirmation to reframe my work as a freelance technical writer, by recognizing that this work not only provided me with the opportunity to earn a reasonable income, but also gave me a forum to practice being ‘inspirational’ (when appropriate) to any individual whose path I came across. In a sense, what I set my intent to do was to put as much love into my work as possible, and to address each project with an attitude of service, as well as true compassion for the person or company for whom I was writing. Additionally, I made a point to always express gratitude for whatever work ‘showed up,’ for that assignment was a blessing that assisted me in meeting my financial obligations.

Interestingly, soon after I put this approach into practice two things occurred. First, my business began to grow, and second, the work itself became somewhat more enjoyable for me. Now, if you apply a similar approach to your current work, there is no guarantee that you will experience the same results, but I am confident that you will, at a minimum, notice an improvement in your work environment, simply because you’ve chosen to bring a more positive energy to the situation. From there, who knows what could happen? You just may wind up attracting someone into your life who can assist you in moving into more satisfying work.

(The preceding article is an adapted excerpt from Spirituality Simplified, Copyright 2002, by Jeff Maziarek.)

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Let’s face it: the truth is the only time any of us will absolutely know for certain who or what God really is, is when we finally leave this planet, moving on to the next dimension. For centuries mystics have reported that the reality of God is truly unknowable. Nonetheless, throughout recorded history men and women have shared their opinions and viewpoints about the essence of God, the Creator, the All-That-Is, and so on.

Why — since the dawning of human life — have people continually theorized about God’s nature? Simply put, deep within each of us there is a strong yearning to know where we come from, and to where we will ultimately go whenever we do leave this treasured planet. While that longing exists in all people, many tend to block it out because it is too complex to think about when more pressing day to day concerns surround them. Others ignore the longing because they don’t know quite how to reflect or where to look for the answers. Coming to an understanding of the true nature of God often takes a backseat to earning the day-to-day living and dealing with the challenges associated with human relationships. Because of these obstacles, many people in the so-called ‘civilized world’ have chosen to look to traditional religion for answers.

In a typical Western religion, God is usually depicted as a “white-bearded male who roams around the sky creating the world.” This God is a Being that controls all things occurring in the Universe, knows exactly what everyone does, and is aware when His laws or commandments are being broken. The idea of punishment for one’s sins is at the foundation of this view of God; this God/Father holds us accountable for our wrongdoing. The errors we make are then “judged by various interpreters of his laws who throughout history have claimed access to the Divine.”

Over the centuries, a great many people have accepted the words of these privileged interpreters (e.g., priests, ministers, rabbis, religious scholars) as absolute truth; to doubt — in any way — the validity of their interpretations would be considered a sin. It is interesting that most people are unwilling to either question the authority of these individuals, or to be skeptical concerning the religious texts that allegedly contain the “Word of God.” Why?

It is often far simpler to accept this information as ‘truth’ than to take the time and energy to question it. Organized religions often effectively wrap everything up in a nice package, requiring little, if any, serious contemplation by followers regarding the nature of existence. Stuart Wilde in The Quickening, illustrates the general willingness to blindly accept religious dogma as absolute truth.

“If you knew nothing about Christianity and you had never heard of the Bible, you would pick up the book and ask the critical question, ‘Who wrote this stuff?’ Err, well, actually no one knows. But, it’s the sacred channeled word of God.”

The very questioning of the origin of the Bible is often considered sacrilegious by many a devout Christian, but is it unreasonable to want to know who wrote such an important literary work? Of course not. It is not solid reasoning, in my view, to simply accept the entire Bible as the “Word of God,” solely because a religion or religions say that it is. Why not? Because it has a number of inconsistencies and contradictions. For example, the Old Testament contains a fair share of violence with turmoil, and includes memorable passages such as the oft-quoted “an eye for an eye,” while the teachings of Jesus in the New Testament include admonitions such as “love ye one another” and “turn the other cheek.” Which of these clearly conflicting messages, then, is the actual Word of God? Or, are we to assume that God has different rules for different periods of time?

Within the New Testament itself there are discrepancies, most notably four separate Gospels that each tells a different version of the same story. If the Gospels in the New Testament are actually the sacred inspired words of God, then why are they not more consistent in their content? Once again, according to Stuart Wilde in The Quickening:

“One would have to presume that either God had an incredibly poor memory, or he had some kind of cosmic twitch whereby every decade or so he would sit bolt upright and, for no explainable reason, blurt out the story he told years back, forgetting what he said the last time.”

While Mr. Wilde’s comment certainly has a tongue-in-cheek flavor, his observation is nonetheless thought-provoking. One possible explanation is that the four Gospels were not literally the inspired words of God, but instead a collection of stories written and then passed on from generation to generation. This could explain the inconsis­tency of the content — as should be fairly obvious to anyone — that stories which are handed down tend to change over time, as each storyteller adds his or her own interpretation and personal flavor to the material.

So, does the preceding commentary imply that there is nothing of value in the Bible, or in any other of the major religious texts for that matter? By no means; there is no doubt that religious texts contain meaningful and helpful information; the key is to discern which of it is of value to you as you move along your path of self-discovery.

I have personally found some aspects of the Psalms in the Old Testament (e.g., the 23rd and 91st Psalms) to be of value in my spiritual growth, as well as some excerpts from the Book of Job. For example, one of the most powerful quotations within the Book of Job, is when Job says, “the thing I feared has come upon me,” (Job 3:25); a statement which I believe refers to the power of our thoughts to attract to us whatever we focus upon — whether we consciously want it or not. That quote helped make me more mindful of how important it is to remain aware of what I am concen­trating my thought and feeling energies upon, so as to not let fear or negativity dominate my consciousness. From this passage, I also came to the critical realization that worrying was a total waste of energy, and therefore extremely counterproductive.

This is just one example of the valuable information that is available in the Holy Bible, and without question, other prominent religious texts (e.g., the Koran, the Kabbalah, and so on) provide worthy content as well. Basically, the important thing is to approach these texts with a discerning attitude that leads you to accept only that information which makes sense to you, and which, in your heart, feels right to you.

In the end, the answer to the question “who or what is God?” is actually something we each must identify for ourselves as we walk our individual paths of spiritual growth. In this regard, the following passage from Michael Newton’s book Destiny of Souls confirms how very important it is for each of us to come up with our own answers:

“Because each of us is a unique being different from all others, it is incumbent upon those who desire internal peace to find their own spirituality. When we totally align ourselves to belief systems based upon the experience of other people, I feel we lose something of our individuality in the process. The road to self-discovery and shaping a philosophy not designed by the doctrines of organizations takes effort but the rewards are great.”

(The preceding article is an adapted excerpt from Spirituality Simplified, Copyright 2002, by Jeff Maziarek.)

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Pick a Payment mortgage loans are also known as option ARMs (adjustable rate mortgages), payment option ARMs, 12-month MTAs, cash flow ARMs and other titles. These types of mortgages offer such features as initial interest rates as low as 1% and several payback options including:

o Interest-only loan features with payments that cover only the interest on the loan;

o Minimum payment programs for even lower payments;

o Fully-index payments (full principal and interest);

o 15- and 30-year amortization payment options; and

o Bi-weekly payment programs for those who want to pay off their mortgages in 25 years or less.

Option ARM purchase loans and mortgage refinancing, including negative amortization loans, interest-only loans and negative amortization loans can give you increased purchase power in areas where housing is more expensive, or for loosing equity in your home to cash out needed funds for debt consolidation, home remodeling or other large expenses.

The periodic rate adjustment for option ARMs are based on one of several indices including:

o Cost Savings Index (COSI) – the average of interest rates certain banks pay to customers on checking, savings and CD accounts.

o Cost of Funds Index (COFI) – a regional average of interest expenses incurred by financial institutions, usually calculated by a self-regulatory agency like Federal Home Loan Banks.

o Monthly Treasury Average (MTA or MAT) – based on the average annual yields on U.S. Treasury Securities adjusted to a constant maturity of one year, as made available by the Federal Reserve.

o Cost of Deposits Index (CODI) – the 12 month average of the monthly average yields on the nationally published 3-Month Certificate of Deposit rates.

o London InterBank Overnight Rate (LIBOR) – an average of the interest rate on dollar-denominated deposits, also known as Eurodollars, traded between banks in London.

“An option ARM may provide flexibility for home buyers with uneven incomes, such as those who work on commission or receive a year-end bonus,” says Jim Kelly, executive vice president of ING Direct. Borrowers gain more control over their monthly cash flow. For example, you can use the minimum payment option to help you pay off debt and then later switch back to a 15 or 30 year fixed payment. Or, you can pay down your principal balance at your own pace and reduce future monthly payments. They are also good for investment properties, where a higher cash flow is desired in the first few years of ownership.

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