Ten One-Page Sales Ideas - Amazon S3
Ten One-Page Sales IdeasTen one-page sales ideas for your prospects and clients:How your 15 year mortgage affects your qualified plan contributions.How a 15 year mortgage requires more risk than a 30 year loan.Appreciation vs. Equity: Do you have one or both working for you?So you think you are safer having your home paid off?Mortgages have not been this low in over 40 years.Use your home equity to get your Social Security check in a lump sum.How a mortgage can help you get your Social Security check tax free.A mortgage during retirement, you have to be kidding. Is your home really a good place to park your money?If you want to leave your kids your home, you need to read this now.1. How your 15 year mortgage affects your qualified plan contributions.What is the reason why people make contributions to their qualified plan? Many say because they save taxes. Well, in reality you do not save taxes you defer them. Qualified plans are not tax savings plans, they are tax deferred savings plans. The best that someone can tell you about your qualified plan contribution is that the apparent tax benefit is… Since they do not know what the tax bracket will be at the time of the withdrawal the best they could do would be to say that the apparent tax benefit today is X, however until we know the withdrawal bracket we cannot say for sure if your contribution will be beneficial or detrimental. If you put money in at a higher bracket than you take it out you win. If you have to take it out at a higher bracket than you were in at the time of your contribution then you lose. Remember qualified plans do two things; they defer the tax and the tax calculation. While deferring taxes today seems like a good thing one must keep in mind that one day you will have to take the money out. The IRS does not go back and ask you what tax bracket you were in at the time you made the contribution, they are only interested in the bracket you are in when you withdraw the money.That being said; let’s look at your mortgage. Many people are contributing to their qualified plans with the sole purpose of deferring taxes while at the same time paying more taxes than required today because of how they pay their mortgage. That is like driving down the highway with one foot on the gas and one on the brake. They are giving up a known tax deduction today with their mortgage interest deduction and deferring taxes in their pensions to possibly pay taxes at a higher tax bracket in the future.Keep this thought in mind. If you pay more taxes than you have to pay because of how you are financing your mortgage, you not only lost those dollars but what they could have earned for you had you not lost them. The dollars you lose in your mortgage interest deductions are in effect rendering the equal amount of your qualified plan contribution ineffective. Give us a call and let us show you how to maximize your tax deductions in both your home and your qualified plan.2. Did you know that your 15 year mortgage increases your investment risk?Very few have ever considered the impact their mortgage loan decision makes on their investment risk. Let’s assume that your plan is to have a 15 year loan and get your home paid off as quickly as possible so that then you can start saving for your future retirement goals. Let’s also assume that you think you will be able to average an investment interest rate of 8%.Since you have the cash flow available to make the payments you choose the 15 year mortgage option because you want your home paid off in 15 years. You get your home paid off after 15 years and then you can begin saving and investing the same amount of your house note beginning the first month of year 16 for 15 years till your retirement.Another option would be to secure a 30 year mortgage loan and begin saving the difference and investing that amount each month at 8% for 30 years. It may surprise you when you do this math that there is no difference in the amount you will have saved at the end of the period in either strategy. However there is a tremendous difference between the two strategies in the risk involved.The risk involved to average an 8% return over a 15 year period is much greater than the risk to average the same rate of return over a 30 year period. Regardless of the investment rate of return you assume you will reduce your risk considerably the longer the time frame you have to apply.Give us a call and let us help you design a mortgage loan that will help you reduce your risk in your investment portfolio and put you in a financial position where you have the liquidity, use, and control of the money.3. Appreciation vs. Equity: Do you have one or both working for you?It is interesting that many people miss the subtle difference between these two important components of the mortgage decision. The first place to start is to understand that the money you put in your house earns nothing. It is like putting money in a tin can and burying the can in the back yard. Your down payment does not earn a penny.Hopefully the home appreciates which does give one the illusion that the money they put in their home is actually earning money. Assume for a moment that the house you bought will never appreciate. This will make this point very clear. If the house does not appreciate then the money that you put down on the house earns nothing.In reality the money you put down does not earn anything. In fact because of inflation the value of that money is actually being eroded. Let’s assume that your home is worth $400,000 today and you only paid $200,000 for it 15 years ago. If you had paid cash for it 15 years ago when you bought it you might be tempted to believe that your money earned an additional $200,000. At first glance that seems correct but it is not. Let’s assume that when you bought it 15 years ago you put nothing down. How much would the house be worth today? $400,000.The point is that the home would have appreciated the same whether you paid cash for it or financed it 100%. If you paid cash your money did not earn anything and because you were not entitled to any mortgage interest deductions you paid taxes that you could have avoided. What if your property is depreciating? It makes even more sense to not have your money in your house if the value is going down. If your money is in the house the value of your money is going down as well. 4. So you think you are safer having your home paid off?Home ownership is such a personal thing and the thoughts centered on your home are often emotionally charged. Having ones home paid off has been the American dream since the pilgrims landed at Plymouth Rock.If what you believed to be true turned out not to be true, when would you want to know? Most people respond with right now. There are three reasons why you should consider having your home financed and not paid off.The first is in the event that you become disabled. The number one reason why people in America lose their homes is because of a disability. In the event that it should happen to you the bank will not want to give you access to the equity you have in your home because they may not get it back. Your physical disability has also disabled your finances.The second reason to have a mortgage and you control your money is in the event you lose your job. There are many people who lost their jobs because of the tragedy of 9/11/01. Something out of their control put their company in a downsize position and they found themselves out of work. They will get another job eventually but what will the banker say about you getting to your equity position? You will find yourself out of control of your money. The third reason to have a mortgage is the economics of the world. You have no control over the world economy but you can have control over your money. Many people miss how important this is. They believe that if they cannot earn a great deal more that the mortgage loan amount refinancing does not make any sense. Being in control of your money is a valuable position. The fact that mortgage interest is deductible helps to reduce the risk and the investment rate required for you to keep your money.Give us a call and let us help put you in control of your money.5. Mortgages have not been this low in over 40 years.It is true that mortgages have not been this low in America for over 40 years. Most people know this piece of trivia but few have taken the time to think through exactly what it means. While most of the country has heard this tidbit of information while listening to their radio driving down the highway at 75mph few have taken the time to consider what this fact really means.What it means is that mortgage interest rates may not be this low for another 40 years. That being the case there may be a tremendous opportunity available today right in front of our eyes.I am afraid many people have been lulled into a false sense of mortgage interest rate security believing that interest rates will never go up again. That is certainly not the case. If history holds true you can bet you will see mortgage interest rates climb higher than they are today sometime during your lifetime. Do not let this important opportunity for a decision on your mortgage pass you bye without you even giving it a serious thought. If mortgage interest rates have not been this low for 40 years, perhaps you will never see mortgage interest rates this low again in your life.One last point, do not be blindsided by the fact that in today’s investment market there is little to get excited about. The fact that if you had the money that is in your home currently in a investment today it may not be able to earn the rate you desire should not cloud your decision to gain access to the money. As investment returns climb you will also see mortgage interest rates go up. At that time it may be to late for you to gain access to your money or the fact that you must pay such a cost to control the money is not worth the risk. Now may be the best opportunity to gain access to your money. Give us a call and let us show you the opportunities available by applying this information to how you manage your money.6. Use your home equity to get your Social Security check in a lump sum.As you know social security checks are mailed to you monthly once you have determined to start receiving them. You will receive a reduced amount if you decide to begin receiving your social security benefits at age 62 rather than 65 which is the current age for full benefits payable. Depending on your income level from other sources your check could also be taxable to you up to 85%. As you know at death your death or the death of your surviving spouse the benefit stops. While this strategy may not work for everyone, perhaps it will be possible for you. Most people who are about to retire have worked hard to be in a financial position to have their home paid off so that they have not mortgage payment. They have a good deal of money in their homes and plan to go to their grave leaving their home and its value to their heirs. One problem with this thinking is that while the kids do get a step up in basis the value of the home is still included in your estate, thus a portion of the value is lost. Since you are not worried about your social security check showing up each month, in effect you have a guaranteed account. You can determine exactly how much of a loan your payment will support in a lump sum at today’s mortgage interest rate and use your monthly social security check to make your mortgage payment. By taking the money from social security which is currently taxable and using it to pay your new mortgage loan which is tax deductible, you have swapped your monthly social security check for a lump sum payment. This can open the door for you to many opportunities. This strategy opens the door for you to do many things that you could otherwise not do. You were going to leave the value to your children anyway, not you can give them the money while you are here and watch them enjoy it. You may wish to give a lump sum to your church, school, or community. We can help you with ideas that accomplish the things you want to do while giving you control of your money. Give us a call.7. How a mortgage can help you get your Social Security check tax free.You work hard all your life, pay your taxes and when you finally get to retirement and get your social security check they tax it too. It doesn’t seem quite fair, but who said it was going to be fair. You can take the money you have currently in your home earning you nothing and put it to work for you. Under current tax law you can qualify for up to $250,000 of gain tax free from the sale of your home. If you are married the amount is $500,000. Many people move when they retire but take the money from the sale of one home and plow it back into the new one. If you qualify for a social security benefit you now have access to an account that you perhaps did not realize. Determine how much money you can withdraw from your home equity in a lump sum from the amount your social security check will support in mortgage payments. Now your social security check comes to you taxable which you use to pay your new mortgage payment which is deductible and you get to spend the check from the mortgage lender tax free.8. A mortgage during retirement, you have to be kidding.While you have been working feverishly to have your home paid off by the time you retire you may want to rethink this issue.You have also been socking away your money into your qualified plan, IRA, 401k, SEP etc. It is possible that at the time of your retirement you will be in a higher tax bracket than you were when you were working. Congratulations. This is a position you want to be in, if you are not chances are you are broke. At the very time of your life when you need a tax deduction the most you find yourself in a position with none. Your kids have all moved out, you have no deductible dependents and your home is paid off which means you have no deductions.This all comes at a time when every dollar you take out of your qualified retirement account comes to you taxable as ordinary income. What if you were to take all your equity out of your home, up to $500,000 tax free? You would have a mortgage note but that is not all bad. The money that you take from your qualified plan comes out taxable but those same dollars used to make your new mortgage payment are tax deductible and you are left with $500,000 out of your pension plan tax free. Needless to say, having a mortgage payment is not all bad when you look at it like this. Remember you can set up your mortgage company to take the monthly check from your qualified account if you just do not like writing checks. What you do with that $500,000 is also very important. If you leave it in your house and die with it in your qualified plan you pay estate taxes on the value of your home and any money in your plan goes to your heirs taxable. No we are not kidding about having a mortgage during retirement.9. Is your home really a good place to park your money?For many Americans the answer to this question is yes. If you have a 15 year mortgage your answer is yes. In fact, anything less than a 30 year loan suggests that you believe your house is a good place for your money. You may not agree that you home is a good place to park your money intellectually but how you are paying for your mortgage will illuminate your true belief.An important thing for you to remember is that your home appreciates the same whether you have your home paid for or financed 100%. That being true, you understand that the money in your home does not earn anything.When you calculate the rate of return on the growth of your appreciation you must remember that the amount you have in the house does not make any difference. If you home is appreciating at a fast rate doesn’t it make sense that it would be even better if you were getting that kind of appreciation without having to put up your money? Another way to look at this is that your home is appreciating but your money in the home is not earning anything. You are getting one return on your equity but no growth on the money you put down or prepay on principle. With a mortgage you have the potential for your money to make you more money than your mortgage payment. This is known as the spread. The fact that your mortgage payment is mostly interest early gives you tax advantages which can help to reduce the risk involved on you keeping your money invested and making mortgage payments. An interest only mortgage would give you greater tax savings than an amortizing loan. The tax savings on the interest deduction may just be the key to putting your money in your control as opposed to the bank.If you want to leave your kids your home, you need to read this now.Many people have worked hard all their life to get their home paid off with the intention to leave it to their children. Sounds like a gracious idea, but there are some questions you should ask yourself before you do.The first question is will my kids move into the home when I am gone? I think the answer for most is no. The kids do not want the house, they want the money. Don’t you really want to leave them the value of the house rather than the house? If they are going to sell it anyway you may consider having the money in another entity that you own and control and can leave them the dollar value rather than the property. Often times the kids will end up selling the house for less than it is worth to gain access to the capital quickly which can be a sizable loss to your gracious intentions.The value of your home is in your estate if it is paid for. If you are subject to estate taxes then a good portion of the value of the home you are leaving them is going to Uncle Sam. It is possible to remove the money from your estate in the form of gifts for your children which is what they want anyway and at your death the home value will be included less the mortgage loan balance due. This would mean that you would do well to owe 100% on your home at the time of your death for estate tax purposes.Another question you should ask yourself is will you ever need to access the equity in your home during your retirement years? If it is possible you may need to get to this money now may be the time to get things in order. Interest rates in the future may inhibit or prevent you from getting to your equity position when you need it the most. A low mortgage interest rate could possibly give you the power to be in control of your money as opposed to the bank to whom you paid your loan off.These are tough questions that require much thought. Give us a call and let us help you find the right answer for you in how to leave the most for those you care the most about. ................
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