Most lenders arrange your home loan based upon a "number" that is the standard reference and conversation point.... rate and closing cost. They judge your loan "successful" if that number is reached.
The media contributes to this "misguided truism" and infers that obtaining a mortgage is similar to a "vending machine" where you put in your coins and get a loan. Nothing could be farther from the truth.
Compounding this, information is cheap on the web. There's no shortage of places to get bad advice behind a website where you may not know who you are dealing with.
The problem with the "number strategy" is it is without regards to:
- • Monthly Cash flow.
- • Existing debt load.
- • Savings.
- • Emergency funds.
- • Debt elimination.
- • Private schools and college funding.
- • Deferred home repairs.
- • Home improvements you would like to make.
- • Anticipated upcoming expenses.
- • Retirement considerations.
- • and "life happens" events.
My wife, Donna, tells me to "keep it simple, you make it too complex….people just want a loan." That may be true I tell her, but the issues still remain.
Obtaining a mortgage without at least considering these questions is like the ostrich that put's its head in the sand. The issues remain.
It just pushes the reckoning back until they surface again.
Many of life events are predictable….it's just a matter of when. What I do, is position you to make "choices," rather than decisions when life's events occur.