Real estate has long been a vehicle for building wealth! So whether you are an aspiring home purchaser, a current home owner, or a real estate investor, the credit coaching in this booklet will be of service to you. I am committed to your success, whether you are able to purchase or re-fiance now or in the near future.
Real estate is a unique way to own an appreciating asset with very little money down. Using other people’s money, you are able to own a $300,000 asset that will grow in value over time without parting with $300,000 in cash. That’s called “leverage.“ Therefore, home mortgages can be viewed as asset generators rather than liabilities.
Granted there have been recent regional declines in home values directly related to high unemployment rates, but, over time, home values have risen from one person’s annual salary to about six to ten times one person’s annual wage simply due to rising inflation. Yes, it was irrational to assume that real estate values would escalate beyond the boundaries of affordability but even with a thirty year time horizon and a two and one half percent inflation rate, your home could be worth twice what you paid for it! For many, their home equity is their only retirement fund!
One key to opening the door of home ownership and real estate investing is credit. Unfortunately, none of us have gone to “Credit University” and the lack of information and the abundance of misinformation on this subject may impede your wealth building plans. In fact, some of the ways to improve your credit are counter-intuitive! Thus the need for de-bunking credit myths and fables.
Like all assets, your credit needs to be managed. This involves how we use credit cards, what rates we pay on credit cards, how close our balances get to our credit limits and the timeliness of our payments. We need to know how to read our credit reports, what factors impact our credit scores, and how to go about correcting errors on our reports.
We need to lear what we can do to boost our credit scores and what not to do before applying for financing. What should we do before and after bankruptcy or divorce? How do we build credit that will encourage lenders to trust us if we pay cash for everything? How do we increase our access to capital for investments? With recent changes in bankruptcy laws, increases in minimum monthly credit card payments, and real estate bargains galore, now is the time for action!
The real purpose of credit is to build wealth and increase cash flow. Using credit to acquire appreciating assets is a habit that requires practice over time just like any other life skill. Credit allows us to leverage money and reshape our life to match our dreams and execute our passions!
As of this edition, the so called “Sub Prime Meltdown” has prompted a tightening of credit scoring to surcharge the cost of interest rates for every 20 points your score is below 740. Sub-prime, which used to be defined as scores under 620, has now been re-defined to mean scores under 680! With some credit card companies arbitrarily lowering credit limits or misreporting credit limits and with one third of all credit reports having errors on them, Americans will pay dearly for errors in their creditfiles either with higher rates, larger down payments, or inability to finance at all! These conditions make this information even more valuable to readers.
These are some of the conversations explored in this booklet. You have challenges. I offer some solutions. You have dreams, I offer strategies. I am committed to your progress, success and abundance!
Warmest Regards,
Tom Mercadante
Senior Loan Officer
360-483-9077
MLO-116194
Please note that I am not a credit counselor, attorney, accountant, or financial planner. I invite you to add these professionals to your wealth-building team. I am not a credit repair service as “credit repair” implies falsely changing bad credit data into good credit data, a fee in advance service prohibited by federal law.
