As a certified mortgage planner and a member of the Financial Planning Association I was pleased to receive this months Journal of Financial Planning with it’s cover story “Guiding Clients Through The Mortgage Mess“. While most financial planners have long recognized the important role that a mortgage (or lack there of) can play in ones financial well-being, in the past most planners took a very passive roll when it came to the structure of their clients mortgage debt.
As the equity in homes all across America appears to be evaporating like a glass of water in the middle of the desert, certified mortgage planners and certified financial planners are making home equity and mortgage management one of the cornerstones of sound financial planning.
Here are a few simple questions with complex answers that you can ask your certified mortgage planner, certified financial planner and certified public accountant:
1) Should you make additional payments towards the principal balance on my mortgage or max fund your retirement and/or college savings plans?
2) What is the effective “after tax” interest rate on your “tax preferred debt” and are you carrying any forms of “non-tax preferred debt”?
3) Considering your ownership intentions should you pay the premium for a 30 year fixed rate mortgage or is a hybrid ARM more appropriate?
The financial devastation brought on by the mortgage mess has opened the eyes of home owners across the country who thought that getting the lowest rate was the key to a good mortgage. The fact is that a mortgage is a financial tool to which serious consideration needs to be given and when it comes to securing financing for your home advice is always more important that price!