Homeowner Escrow Accounts & Wealth Building

 

Learn more about your home escrow account so that you can build wealth more efficiently…

 

Over the years the creator of TheWealthIncreaser.com has received many questions about escrow accounts of homeowners and they all wanted a clear explanation of what escrow accounts were all about as it is rarely a subject that is explained in meaningful detail by many in the finance industry.

 

Let us first start by defining what a home escrow account is and then we can dive into some of the more frequently asked questions—and answers that hopefully will put your mind at ease as it relates to homeowner escrow accounts.

 

A home escrow account is an account that home owners have that is established with their mortgage servicer for the payment of taxes and insurance–generally.

 

An escrow account acts as a savings account that is managed by your mortgage servicer.  Your mortgage servicer will deposit a portion of each mortgage payment that you make on a monthly or otherwise agreed basis into your escrow account to cover your estimated real estate taxes and insurance premiums.

 

In a nutshell,  it’s really just that simple!

 

Your escrow account will cover regular property taxes and homeowners insurance as well as flood insurance if it’s required in your area.  It does not generally cover water/sewer bills, storm water fees or other assessments by your local government.  It does not cover homeowner association dues or supplemental tax bills.

 

It is important that you realize that your tax or insurance bill would be sent directly to your mortgage servicer and you would normally not be involved in the process.  In essence, you are relieved of paying those bills directly as long as you keep the account funded at the right level and you stay current on your mortgage loan.

 

If you don’t have a mortgage on your home or you have a more exotic loan type—you would pay your taxes and insurance directly to your taxing authority or insurance company.

 

Additionally, if you own your home outright you would not be mandated to carry insurance, however your tax payments would be mandatory and it would be your responsibility to ensure that they were paid in a timely manner.  It is also a good practice to carry insurance unless you can effectively “self-insure” your property.

 

Whether you need to have an escrow account or not will  depend on your loan type and your lender.  Government-backed loan options, like FHA and USDA loans, require an escrow account.

 

Lenders of conventional loans can decide if an escrow account is necessary!

 

Even if an escrow account isn’t necessary, they can still be a good idea. If you don’t use an escrow account, you’ll be responsible for paying property taxes and insurance yourself, so you’ll need to handle budgeting and paying them on time.  You can simplify your “monthly finances” by setting up an escrow account if your mortgage servicer allows you to do so.

 

When you have an escrow account, your lender or mortgage servicer manages the payments and budgeting for you, and you’ll be able to spread out your taxes and insurance payments over the year, instead of paying a lump sum all at once.

 

How Escrow Analysis Works

Your mortgage servicer and/or lender will estimate the amount that will have to be paid for your real estate tax and homeowners insurance bills.  This estimate, provided during closing and often adjusted in future years, is based on the taxing authority and insurance company, or previous tax and insurance bills of the previous homeowner.

 

Each year, your mortgage servicer will analyze your account to make sure you’re paying the right amount to maintain the minimum required balance according to a formula.  Because the formula is based on an estimate of your taxes and insurance that can change over time, the amount can be overestimated or underestimated.

 

This is called an escrow shortage or escrow overage in the mortgage industry!

 

If there’s an escrow overage, you’ll get your money back with a refund–HOORAY!

If there’s a shortage, you’ll typically have a couple of options to pay the remainder–BOO!

 

Your first option is to pay the full shortage up front.

 

Another option would be to “pay the shortage over a period of 12 months” along with your regular payment.  However, this option may not be allowed by some mortgage loan servicers.

 

You also may pay a “partial amount” with some servicers, and your payment would go up–but not as much as stated in the communications (Escrow Account Disclosure Statementthat you would receive from your servicer.

 

If you chose to “pay nothing” you would in essence be choosing to “pay the shortage over a period of 12 months” and your payment would go up by a certain amount–normally the amount stated in the communications (Escrow Account Disclosure Statementthat you would receive from your servicer.

 

You would normally receive this notification 30 to 60 days before the monthly increase, thereby giving you additional time to decide which of the above options you would choose if allowed by your servicer.

 

How Escrow Works When Buying A Home

When you make an offer on a home, you’ll typically include a personal check of 1-2% of the purchase price depending on your state or jurisdiction.  This is called “earnest money,” and shows the seller of the home that you’re a serious buyer and not merely wasting their time.  The check would not be deposited until the seller accepted your offer.

 

If your offer is rejected, you’ll get your money back, however if the offer is accepted, the money will go into an escrow account to be held until it’s time to close.

 

Then, the money will be used toward your down payment and closing costs. In this scenario, the escrow account acts as a neutral place for the money to sit until all paperwork is finished and the home is officially yours.  Although this is an escrow account it differs from the one in this discussion as the escrow account in this discussion is used primarily for property taxes and insurance of a home that has already been purchased.

 

Refund of Escrow

In cases where you overpay your taxes due to the servicer coming up with the wrong amount needed to pay taxes and it is over a certain amount a refund check would be sent to you by the servicer.  This often happens in the early years of your mortgage but could happen later depending on your particular area and circumstances.

 

If you have excess funds in your escrow account you would receive a refund check based on a formula.  That refund check would be a welcome surprise to you.

 

Payment to Escrow

In some cases you will have to make an additional payment in a lump sum or on a monthly basis to your mortgage servicer.  If your taxes or insurance increased during the year or when your policy renewed–you might face a situation where you would have to pay an additional amount to bring your escrow account back up to an acceptable level.

 

Other Costs Associated with Homeownership

In addition to your escrow payment that includes mortgage, interest, taxes and insurance there are other costs associated with home ownership that you must budget for on a monthly basis and they include the following:

 

Special Assessments

In some subdivisions or neighborhoods a “special assessment” could be put into effect for sidewalk or sewer improvements and you would possibly be responsible for a number of years depending on the improvement, the amount and your jurisdiction

 

HOA Fees

In some areas and communities you may have to pay home owner fees or association fees based on the amenities in the neighborhood.

 

Furthermore many associations control what you can and can’t do in the subdivision such as changing your house paint color, parking on the road, assessing penalties for your failure to pay HOA dues and other control mechanisms that seek to keep the property values as high as possible in the subdivision.

 

Utilities

You must account for utility payments such as water, electric, gas, phone and other monthly recurring costs associated with homeownership.

 

Stormwater Fees

In some communities storm fees are assessed to homeowners and they are often outside of your water payments and escrow payments.

 

Rapid Fire Q and A

 

Q1: How does escrow accounts work? 

A:  Your escrow account allows your mortgage servicer to pay your real estate taxes and/or insurance premiums for you.   The payments are initially made by you to your servicer and they subsequently forward the payment to the taxing authority and/or insurer. 

Every time you make a monthly mortgage payment a portion is deposited in an “escrow account” that is managed by your servicer.  An escrow account ensures that your bill is paid in full and on time and frees you from the task of handling those payments yourself.

 

Q2: Exactly what payments come out of my escrow account?

A:  Your real estate taxes and/or insurance premiums.  If you don’t have a mortgage you would not have an escrow account and you would pay your taxes and insurance directly!  

Private Mortgage Insurance and/or Mortgage Insurance Premium (if you put less than 20 percent down at time of purchase) would also come out.  Flood insurance and other fees if included on your real estate tax bill might also be included.

 

Q3: Where do I get the information that is needed to calculate my escrow payments?

A:  Most loan servicers will project your your real estate and insurance payments based on past numbers, or information on your closing documents.

 

Q4: Can the amount that I pay monthly change?

A: Absolutely, it depends on the movement (up or down) of your taxes and insurance in most cases.  With most servicers a review is done at least annually and any changes (increases) in your mortgage payment will be reflected on your “Escrow Account Disclosure Statement” which you would receive after the review was conducted.

 

Q5: If I pay too much for the year will I get a refund?

A: As mentioned earlier if you pay too much—you will receive an escrow refund—and it would be a big surprise for you—prior to your landing on this page. 

If you pay too little–you would have to pay a lump sum to possibly keep your payment the same or pay more on a monthly basis–again that too would be a big surprise to you,  prior to landing on this page.

 

Q6: How do I know if my payment calculation is accurate?

A: As to the accuracy of your payments, your mortgage company will perform calculations to ensure that there are sufficient funds.  They would normally maintain a “minimum escrow balance” and under the law they may also add a small cushion in anticipation of changes in your taxes or insurance premiums.  Those amounts are added to your monthly mortgage and you would pay them monthly.

If there  was an overage of a certain dollar amount you would be refunded a portion.  If their was a shortage you would owe an additional amount.  You can do a ballpark estimate by dividing your most recent tax bill by 12.  Your loan servicer will also have to keep a 2 month reserve in most cases. 

Therefore, add two months to the estimate (i.e. $1,200 / 12 = $100 per month and $1,200 plus 2 months = $1,400–$1,400/12 = $117 per month estimate) and you will come up with a ballpark figure that you can use as a check.  

 

Q7: Is a minimum balance required in my escrow account?

A: Yes, minimum account balances are governed by federal law–or by your loan contract and applicable state law. 

In most cases your minimum balance (excluding PMI or MIP) will be 2 months  of escrow payments unless your loan contract specifies a lesser amount. 

 

Q8: If my payment increases, can I still receive an overage check?

A: Yes, due to the most recent estimates for the year you may receive a refund and when the taxes increase–the review by your servicer might signify an increase in your monthly payment “after” you have received your escrow refund check. 

If you have an overage of $50 or more and your loan is current, your servicer would be required to send you those funds rather than “decrease” your monthly payments. 

 

Q9: Why can’t my mortgage company apply the overage to future mortgage payments?

A: By law they must notify you if you have an overage of $50 or more and your loan is current, your servicer would be required to send you those funds rather than “decrease” your monthly payments. 

If you desire to make an additional payment from the overage check you can do so, however you must cash in the check and indicate additional payment of principal or interest when you send in your monthly mortgage payment.

 

Q10: What options do I have if there is a shortage in my escrow account?

A:  You can choose to pay the entire shortage (or in some cases a partial shortage depending on the lender) or pay the shortage over 12 months and that would increase your monthly payment. 

If the additional payment amount will cause undue hardship you can contact your lender and see what can be worked out.  PMI or MIP may be able to be eliminated if your property and loan meets certain conditions and that would have the effect of lowering your monthly payment.  Other options such as loan modification may also be available.

 

Q11: Are there penalties involved if I fail to pay my shortage in full?

A: No, if you elect not to pay the shortage your monthly payment would increase but there would be no penalties or additional interest payments due.

 

Q12: Why did my taxes and/or insurance go up?

A:  Your taxing authority possibly increased the millage rate and/or your property value increased.  Your home insurance policy may have increased for this same reason–among others.  Based on projections made by your loan servicer your escrow account payment would then go up in most cases.

 

Q13: If I get news early that my taxes and or insurance will go up can I send in additional amounts?

A:  You can normally send additional escrow account payments at any time, and your taxes and insurance would be paid.  If there is an overage or shortage your servicer would send you a refund or request additional funds  or increase your monthly payment.  

 

Q14: If I pay monthly by automatic draft will my new payment amount be automatically adjusted as a result of escrow changes?

A:  Yes, your mortgage servicer would normally adjust your payment based on the new payment.  Please ensure that you have enough money in your account to meet the new monthly payment amount.

 

Q15: Will my third-party payment provider adjust my payment to meet the new payment amount?

A:  If you use a third party, that can be a little trickier.  You may want to contact them and let them know your new payment amount that was reflected on the Escrow Account Disclosure Statement.

 

Q16: Can I view my escrow account disclosure online?

A: Yes, most lenders have an online dashboard portal that allows you to do so.  Many lenders will also mail you an Escrow Account Disclosure Statement notifying you when your payment will increase. 

 

Conclusion

Your escrow account allows your lender to pay your real estate taxes and/or insurance premiums for you.

 

Every time you make your monthly mortgage payment a portion is deposited into your escrow account and depending on when your taxes are due or your insurance policy renews—the money is pulled out and paid to the taxing entity(s) and insurance provider.

 

Whether your escrow was calculated effectively by your mortgage servicer and you are due a refund or if you may owe an additional amount, you can alleviate your fears by knowing how escrow accounts work on the front end–and planning for your future success.

 

You must know at the earliest time possible that taxes and insurance can rise or fall for varying reasons and it is your responsibility to know what is happening in the area in which you live. You must also know that taxes and insurance can rise or fall and that too is your responsibility to know at the earliest time–where and when possible.

 

To alleviate your concerns about escrow account movement be sure that you establish a properly funded emergency fund and you have a conceptual overview of your life stages that will benefit you greatly in your future.

 

Furthermore you must know if you have a fixed rate mortgage or one that can potentially fluctuate.

 

Always consider the total cost of homeownership—prior to your home purchase.  That means you must know your mortgage payment including escrow, your utility payments, yard maintenance, age of HVAC, water heater, electrical and other appliances and components of your home.

 

Your options will vary depending on type of loan and the fine print in the loan documents of your particular lender when all is said and done.

 

You now are equipped with the homeowner escrow knowledge that you need to succeed.

 

You now know that when market downturns occur such as the 2007/2008 housing debacle or the economic downturn that we are now experiencing due to COVID-19 there is a good chance that your mill rate and taxes will remain steady or possibly go down due to falling home prices depending on your particular home location.

 

You also know that if you are in an improving neighborhood that is in high demand your taxes could potentially go up!

 

It is your responsibility to plan on the front end for all scenarios whether an increase in taxes, insurance rates, special assessments, HOA fee increase etcetera–and it is important that you properly establish an emergency fund at the earliest time possible as you move along through the various stages of your life.

 

All the best toward your homeowner escrow success…

 

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Decisions & Wealth Building

 

Learn why the decisions that you make throughout your life can help you achieve your wealth building goals more efficiently…

 

In the current environment it is important that you reflect on your ability to make the best or most optimal decision at the various stages of your life.

 

On this father’s day 2020  the creator of TheWealthIncreaser.com reflected back on the importance of making good decisions so that you can achieve more in the current economy.

 

The decisions that you made in your past (for the most part) have directed you to where you are now at.  However it is important that you now focus on your future and the decisions that “you can now make at this time” that can lead to you achieving what you desire  as you build wealth.

 

By making the decision to take the following 3 steps and acting on making those steps happen at a level that is the best that is within you—you can start on a sincere journey toward making your dreams come true.

 

It is important that you decide to see exactly where you stand financially at this time so that you can use the financial data to make better decisions for your future moves as it relates to your finances.

 

You must decide at this time to get a real handle on your monthly inflow and outflow of cash, know what you own and what you owe and know what you make and spend annually.

 

It is important that you have the mindset that you will manage your finances in a manner that puts you in control–not creditors or others who have no concern for your future outlook!

 

If you at this time have great credit (740 or higher credit score) you are to be commended.  However, it is important that you make the decision to continue to manage your credit effectively.  And for those who do not have great credit at this time, it is important that you decide at this time to manage your credit more wisely.

 

You can do so by understanding the 5 credit factors and gaining the knowledge of how you can make the “5 credit factors” work for you and your family in a more rewarding and beneficial way–starting today!

 

By utilizing the “5 credit factors” that you now have the opportunity to master you can put yourself in position to do what you need to do–to make your wealth building dreams come true.

 

For those of you who have a net worth that allows you to navigate through life without utilizing credit–you too are to be commended.

 

However, you too must make the decision to manage your cash flow at an optimal level.

 

It is important that you have a mental picture of all areas in your financial life that you need to address.

 

You must take an accurate and analytical look at your insurance needs, your investment concerns, your current tax position, your emergency fund position, your education funding needs, your estate planning/wills and your retirement planning concerns.

 

By doing so you put yourself in a better position to make decisions that are good for you and your family and you greatly enhance the possibility and probability of achieving your wealth building goals.

 

Conclusion

 

By deciding to take decisive action and leaving all excuses behind, you position yourself and your family for a more prosperous future–inside of your mind.

 

You must realize that it is your responsibility to “decide right now” to achieve at your highest level of excellence while you are here on planet earth–and it is your responsibility to know your self-worth.

 

Why live your life on a daily basis with worry, anxiety, fear and a lack of direction on the inside of you when you can make the decision to choose a better path toward making your dreams come true?

 

By doing so you open up new possibilities for not only yourself, but also future generations as well.

 

All the best to your decision to achieve at a level that will lead you to a higher level of success…

 

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Patience & Wealth Building

Learn why you must have patience as you build wealth…

 

It is important that you have patience as you build wealth as in many areas of wealth building time is involved.

 

In this discussion TheWealthIncreaser.com will discuss ways that you can use patience and a plan of action to achieve your wealth building goals.

 

1) Have a comprehensive overview of your finances…

Prior to selecting the financial professionals that you need to help you achieve optimally you must know where you want to go.

 

It is important that you realize that there are things that you don’t know—that you don’t know that you don’t know and that applies to all of us.

 

Your lack of knowledge can be very detrimental to your future wealth building efforts if you don’t have a mental construct of what you need to know.

 

Therefore you must know at this time that you must know your inflow and outflow of cash on a monthly basis along with the knowledge of your net worth so that you can gain a better picture of where you can go.

 

You must also have mastery of how credit works and finally you must know all areas of your finances that you must address.

 

Patience will be required of you, however by visiting this site you now have a concise blueprint of what you need to do.

 

2) Choose the right financial professionals

 

It is important that you choose highly competent financial professionals to work with.

 

Although turnkey tax programs, franchise tax preparation companies, discount brokerages and robo advisors are in abundance everywhere, that does not mean they are your best choice.

 

You must have the patience to interview the financial professionals that you need to help you achieve your wealth building goals and not seek the quick way out as the quick way out can put you in a worse position for building wealth in many cases.

 

Take the time out of your busy schedule to interview and ultimately work with financial professionals that you are comfortable working with that has the competence and track record that you need to succeed!

 

3) Realize that patience is required to reach your goals…

Since you now have a more complete picture of what you need to do in your financial life and you have selected or chose financial professionals that you are comfortable with and are sincerely working in your best interest, you must realize that reaching your educational, goals, tax goals, investment goals, estate goals and retirement goals will require that you have patience as you must allow your investments the opportunity to grow.

 

Conclusion

 

Your wealth building efforts can be achieved, however it is important that you are patient as you must give your money time to grow.

 

You must also have the patience to interview and assess financial professionals that you don’t know and may cause discomfort upon meeting initially but may be a good fit for you and your future goals.

 

Even if you choose to pursue your wealth building success by doing it on your own you must realize the pitfalls and know that there are areas that you make lack the required knowledge in and it is your responsibility to get that knowledge on the front end.

 

You must not have a “blind” mind as it relates to seeing your finances and financial future!  And you must know the steps that you need to take to reach the goals that you desire.

 

By doing so you can reach the goals that you may now feel are outside of your reach and avoid the disappointments that so many have encountered because they were looking at their finances in isolation and they lacked the patience to put together a comprehensive plan  (at the right time) that gave them a real sense of reality of where they could truly go–and put them in the know.

 

All the best to using your patience to achieve lasting success…

 

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Life Stages & Wealth Building

Learn why it is important to invest in your future early in your life stage so that you can build wealth more efficiently…

 

Investing for your future can be a way to reach many of your goals.

 

However, it is important that you know your money management personality and what stage you are now at in your life so that you can choose the type of portfolio that allows you the opportunity to reach your intended wealth building goals.

 

In this discussion TheWealthIncreaser.com will (hopefully) help you come to a clearer decision on your investment portfolio selection based on where you now are in your life stage and your intended goal(s).

 

Regardless of your life stage you must begin your wealth building journey by knowing what you are building wealth for.  Or another way of looking at it is what are your goal(s) for utilizing the funds that you plan on investing and what is the timeline when you will need those funds?

 

If you are saving for your retirement and you are age 30 you can use a more aggressive portfolio than if you were saving for college for your 9 year old son.  If you were age 70 and was seeking steady income during your retirement years you would want to take a more conservative approach with your portfolio selection.

 

If you are uncomfortable in the selection of portfolios you can use financial advisors, however it is important that you choose your financial professional(s) wisely.

 

Below we will analyze three savings scenarios to help give you an overview of how you can put together an investment portfolio that could possibly help you build wealth more effectively and more efficiently depending on your life stage.

 

Saving for Retirement

If you are age 30 and you plan on retiring at age 62 you want to “save aggressively” due to the long time horizon as it gives you time to absorb the ups and downs of the market.  If you wanted to achieve financial independence and retire early you would be at a point in your life stage where you would have a need to invest even more aggressively.  Under either scenario you would want to put up to 85 percent of your portfolio in stocks and 15 percent in bonds.

 

Saving for College for your Children

If you are age 30 and you plan on saving for your 9 year old sons college tuition you want to save less aggressively or at a “moderate” level, therefore your investment portfolio might consist of 60 percent in stocks and 40 percent in bonds based on your time horizon of 9 years.

 

Saving for Income During Your Retirement Years

If you are age 70 and you are retired you would be at a point in your life stage where you invest more conservatively.  You would take a “conservative” approach because you are at a point in your life where you can’t afford to take losses–therefore a consistent blend of 65 percent bonds and 35 percent stocks might be appropriate for your situation.

 

Conclusion

 

It is important that you have a conceptual overview of where you are now at in your life stage as that knowledge has the potential to provide you more clarity about where you are now at and where you can possibly go.

 

The above scenarios are to be used as a guide only and you may have to tweak the investment percentages to meet your intended goals based on your particular age and time span for use of the funds.  However, it can be used as a starting point to get you in the frame of mind to invest in a way that will help you build wealth.

 

By determining at the earliest time possible the goals that you want to pursue and determining the type of portfolio that is needed you can move about your life in a manner that reduces anxiety and provide a road map that is realistic and achieve goals that are more likely to occur.

 

Keep in mind that market downturns can occur and on occasion at the time that you want to utilize (cash in) the funds for your intended goals.

 

By getting a real jump on your investments by knowing where you now are and where you want to goyou are showing great faith and belief in yourself and there is great favor–in your horizon by doing so!

 

All the best to your life stage and wealth building success–regardless of your age or life stage…

 

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Home Ownership & Wealth Building

Learn why you must determine if home ownership is for you on the front end—if you desire to build wealth efficiently…

 

In the current economy many are contemplating whether moving into a home or continuing to rent is the best option for them and their family at this time.

 

In this discussion TheWealthIncreaser.com will discuss ways that you can decide on whether purchasing a home now in an effort to build wealth or continuing to save and purchase at a later date is your best option.

 

Even though owning a home is the dream of many around the world, home ownership may not be for you—or for you at this particular point in time.

 

You must determine on the front end if you are “ready to buy” (by looking at your financials), “willing to buy” (by understanding what home ownership consists of) and be “able to buy” (by having the credit score and funds that are needed to consummate the closing).  You must also know your responsibilities after the closing so that you will improve the odds that you will remain a homeowner!

 

Let’s now look at the above concerns in greater detail to determine if home ownership is right for you at this time so that you can build wealth or pursue your path toward the success that you desire and deserve in a more efficient manner.

 

Looking at Your Financials…

It is important that you know at the earliest time possible what you make and what you spend on a monthly basis.

 

Therefore you must create a monthly cash flow statement or budget at a minimum and use the information that is obtained from that analysis to make wise financial moves—whether it be a home purchase or any other major purchase.

 

You must have the income that allows you to meet your current or potential housing payment and pay off your other debt on a monthly basis in a way that leaves you in the black (positive income after income and expenses are determined).

 

Looking at what Home Ownership Offers You …

 It is important that you understand the home buying process “prior to” closing on your new home.

 

If you purchase in the right way your home purchase can be an investment in your and your family’s future and can help you build wealth more efficiently.

 

Home ownership offers you the opportunity to have more peace of mind by having private access to your own dwelling that you are responsible for in the form of making timely monthly payments if you take out a mortgage–as well as other upkeep.

 

You are also responsible for maintaining the interior and exterior of the home, upkeep for landscaping, Heating Ventilation and Air Conditioning, water, electrical, gas and all appliances in the home—among other areas of upkeep.

 

Looking at Your Credit Score and the Funds You Need to Close…

You must also ensure that you have been managing your finances wisely in the past—or at least for the past 24 months or so.

 

If you lack the money management personality that allows you to manage your finances effectively—now may not be the time to purchase your dream home.

 

Do you have an emergency fund in place or do you have a plan to properly establish one prior to or during your period of home ownership that is realistic and achievable based on your household income?

 

Do you have the necessary down payment and funds for closing on the home that you desire?

 

Do you know the price points (what you qualify for that allows you to live at the level that you desire) of the homes that meets your monthly budget that will or will not leave you house rich and cash poor?

 

By answering the above and other pressing questions that are unique to your net worth at this time and your income and expenses—you put yourself in a better position for your home purchase regardless of the economic climate or what others may be doing.

 

Conclusion

 

The purchase of your dream home could be the key toward more freedom and financial independence (wealth building) for you and your family if you do it right on the front end by addressing the topics that were discussed above.

 

By purchasing when the time is right in the right neighborhood with strong schools and an improving economic landscape you can build equity and possibly refinance (pull money out for home renovations or other financial concerns), sell (after 2 years of ownership as an owner occupant you can sell tax free on gains up to $250,00 or $500,000 if married), use the interest payments to lower or limit your tax liability (deducting the mortgage interest on schedule A),  rent the property out (for income and tax advantages) or pass on the property to future generations in a way that allows your future generation to have a better stake in where they can take their life and their family’s.

 

You must realize that as with any investment–market downturns can and will occur–and that is true in the housing industry as well!

 

Always realize that home ownership is not for everyone as many are totally comfortable renting and using their funds to build wealth in other ways.  However, home ownership can be a powerful tool for those who use it in the right way–and are properly positioned to purchase at this time.

 

Still others are at a debt level that makes owning even a starter-home unrealistic at this time!

 

Even though there are no guarantees in life, a home can be purchased and utilized in a way that can help you build wealth.  If used effectively your home purchase can be used as a major tool for helping you enjoy your retirement years in a way that serves your best interest as well as helping you achieve many other goals that you have.

 

Besides, you have to live somewhere!

 

All the best toward your home purchase and building wealth at a level that is “your” absolute best…

 

 

The above article was written by Real Estate Agent Thomas (TJ) Underwood who is a licensed real estate agent in the state of Georgia serving the South Metro area of Atlanta.  He is the creator of TheWealthIncreaser.com and has over 20 years of real estate experience in the Atlanta market.  He has written over 500 articles on personal finance and real estate along with a number of books and e-books and he is passionate about helping potential home owners purchase their home in a manner that serves their best interest and his writing style reflects that passion.

 

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Why You Must Believe in Yourself While Building Wealth

Learn why you must believe that you will achieve–as you build wealth…

 

Whether you look down at an ant and believe that you can’t or you look up and see a star and truly know who you are–you must always know that you can—if you plan.

 

Your vision of success must be within your heart and mind and you must move to action on a consistent basis in a way that you can win–that will bind!

 

Are you in position at this time to make moves that are divine (will last throughout your lifetime and beyond)?  It is important that you have a handle on your finances in a way that puts you in control–and keeps you in control.

 

In this discussion TheWealthIncreaser.com will detail ways that you can achieve your dreams and move forward in life at a good or more prosperous pace while you are here on earth.

 

Determine Your Cash Flow at the earliest time possible!

 

Will I earn just enough to get by on or will I obtain a surplus that allows me to go through my monthly expenses and determine what is best for me and my future?  Your cash flow position allows you to look at your finances and debt in a way that you may have avoided in the past.

 

Determine your credit management skills at this time!

 

Are you aware of what credit is and how you can make it work better for you and you family?  It does not have to be difficult if you have the right approach.

 

Now is the time that you develop the credit management skills that will serve you throughout your lifetime.

 

Determine the areas of your finances that you can improve upon!

 

Whether you desire to improve your insurance position, investment position, tax position, emergency fund position, education planning positions, estate planning/wills position, or your retirement planning position you must know that you need to address those areas and you must have a plan of attack–do you?

 

Conclusion

 

You can achieve many of your goals that you may feel are out of your reach at this time.  Proper focus and a plan of action that has the real potential of making real success happen in your life must be utilized in a way that leads to the success that you desire.

 

You can achieve all of the goals that you have in your heart and mind if you are truly sincere and you have an unwavering desire to make real success happen in your life at this time.

 

All the best as you achieve all of your wealth building success…

 

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Smallest to Tallest & Debt Payoff

Learn how you can pay your debt off faster and start to build wealth efficiently throughout your lifetime…

 

In the current economy many are contemplating ways that they can pay off their debt effectively and more efficiently.  Many are over-thinking their situation and remaining idle or are moving forward at a snails pace.

 

The real key at this time is determining if you are truly motivated to pay down or pay off your debt, and if so–putting together a debt payoff or debt pay down plan that you believe in and will get you the desired results.

 

There are many approaches that you can take to pay off your debt such as the debt snowball approach where you attack the smallest debt and go to the largest, debt avalanche approach where you attack the highest interest rate and move to the lowest interest rate along with many others that are too numerous to discuss at this time.

 

It is important that you realize that the real key to paying off or paying down your debt is determining “why” you want to pay off or pay down your debt and then making a real commitment to focus in on a consistent basis according to a plan that works for you and your cash flow position.

 

Do you desire to save time and interest by using the debt avalanche approach or do you feel more comfortable eliminating debt faster but paying more in interest overall by using the debt snowball or some other method?

 

Your money management personality will play a role in the debt payoff method that you consider–and ultimately choose!

 

Many of those who now have credit card debt and other revolving or installment debt are looking for creative and highly effective ways of paying off their debt.  And even though we are in the COVID-19 era–NOW may be the time for you to start on your debt payoff or debt pay down journey.

 

In many cases, the simplest and most effective path is paying off the smallest (the one with the lowest balance) debt that you now have and then working your way up to the tallest ((the one with the highest balance) debt that you owe.

 

Conceptual Understanding

 

Keep in mind that there are many other ways to pay off your debt and this strategy may not be right for you, but is one worth at least considering.

 

Even so, you still want to know that in case of a financial emergency you will find yourself in a comfortable position to still be able to pay off your debt.

 

In this discussion TheWealthIncreaser.com will detail ways that you can pay off your debt and at the same time build a better future for yourself and your family—in the current economy.

 

If the amount of debt that you owe is at a high level and it looks difficult to pay off or pay down at this time—it is ok if you are outraged at your past behavior—however you must leave anger behind as it has the potential to slow down your progress!

 

Your outrage (motivation) at this time can get you on a path toward major debt payoff and turning your finances around and achieving meaningful goals.

 

At this time TheWealthIncreaser.com  will discuss ways that you can pay off your debt that will force your mind to take a more visual look at your debt that could lead to you becoming more inspired to pay off or pay down that debt in a more timelier manner so that you can enjoy life on your terms.

 

Let’s now look at how you can reduce your debt efficiently at this particular point in your life.

 

Smallest to Tallest Credit Card Debt Payoff

 

By starting your debt payoff method by looking at what you owe from a comprehensive perspective (analyzing all of your outstanding debt) you can put yourself in position to come up with a more efficient debt payoff or debt pay down plan.

 

By knowing your monthly income (and outlining your total debt that you have at this time) you can put yourself in real position for real success throughout your lifetime!

 

It is important that “you” know your current balances on all of your outstanding debt  and your interest rates along with what you spend based on your standard of living on a monthly basis.

 

Assuming your credit card and other monthly debt are as follows:

 

Credit Card 1  $1,560–minimum payment $30–17.99% interest rate

 

Credit Card 2  $1,970–minimum payment $30–13.99% interest rate

 

Credit Card 3  $2,460–minimum payment $50–20.99% interest rate

 

Credit Card 4  $3,975–minimum payment $70–11.99% interest rate

 

Auto Loan  $1,260–payment $300

 

Mortgage $115,600–payment $800

 

Utilities and other monthly expenses including auto and mortgage were $1,800 in total:

 

If your income on a monthly basis is now at $2,500 you would have $700 ($2,500 minus $1,800) to apply toward your credit cards and other debt on a monthly basis.  By paying the minimum amount on credit cards 2, 3, and 4 ($150) and an additional amount of $550 on credit card one you would eliminate credit card 1 which has the smallest balance in 3 months and move along to credit card two that has the second smallest balance.

 

You now have $550 that you were paying on credit card one and $30 that you were paying on credit card two ($580 total) to use to pay off credit card two and in just over 3 months from the time of paying off credit card one–or 6 months from your debt payoff start day credit card 2 would be paid off.

 

You now move to credit card three and you now have$580 plus the $50  ($630 total) that you were paying to credit card 3 to pay off credit card three in about 4 months from the payoff of credit card 3–or 10 months from your debt payoff start day–and credit card 3 would be paid off.

 

You would then have $630 that you were paying off for credit card three to apply to credit card 4 that you were paying $70 per month to pay off–meaning you would have $700 after 10 months of paying off your credit card 1, 2, and 3 to apply to credit card 4 (your tallest credit card debt).

 

Therefore, at a payment of $700 per month in less than 6 months credit card 4 would be paid off and you would be in position to use the $700 that you now have available on a monthly basis to properly establish an emergency fund if you have not done so, establish an education savings account for your child, pay off or pay down your car payment or mortgage payment more aggressively, save more aggressively for retirement or pursue other goals that you may have.

 

By using your motivation, an effective action plan and putting forth the required effort– in 16 months from the start of your debt payoff journey you would have all of your credit card debt paid off and you would be in a better position for lifetime success!

 

If your income was at $5,000 per month you could do even more by paying off the above debt even more aggressively,

 

If you lacked the income at this time (say your income on a monthly basis was less than $1,900) you would have to get more income, cut expenses or do a combination of the two.

 

If your debt payoff under the best of circumstances would take 4 years or more bankruptcy should be given real consideration “prior to” depleting your savings, retirement and other accounts.

 

That is why you must “at this time” determine ways to increase your income or cut your debt level (or do a combination of the two) so that you will not overthink your situation,  remain idle, or make bad choices by not seeing a realistic way out.

 

You now know that you can achieve optimally during your relatively brief stay while here on earth, however it is your responsibility to get the ball rolling and stay committed even when adversity occurs.

 

Conclusion

 

It is not only important, it is imperative that you come up with a plan to reduce your debt or save more aggressively so that you can reach your desired goals.

 

By making a decision at this time “you can put yourself in position to control your future” as opposed to having credit control your future.

 

You can lead your family and loved ones on a positive journey where success lives!

 

All the best as you journey toward a lifetime of success and pay off your debt from smallest to tallest or in any other manner that you see that will work for you and your family…

 

 

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Deep Thought & Wealth Building

Learn why giving deep thought to what you desire most can lead to you reaching your wealth building dreams in a more efficient manner…

 

In the current economy it is more important than ever that you give “serious thought” to what you desire most.

 

In this discussion TheWealthIncreaser.com will discuss the importance of giving “deep thought” to what concerns you most during your lifetime while you are here on planet earth.

 

And just as the creator of this site is giving deep thought and looking back over many years to determine where and if improvements can be made in various areas—so too should you be looking back over your lifetime and determining where you can make improvements and enhancements to improve your living conditions–now and in your future.

 

With the COVID-19 virus running rapid in many parts of the world many are taking the time to “look within” and see if there is a greater meaning for their life as they experience major changes on a daily basis in how they go about their day to day activities.

 

And just as you must give serious thought to how the COVID-19 virus will affect you and your family—so too must you give serious thought about how you will more effectively manage your finances from this day forward.

 

You can now give serious thought to your current state of your financial affairs and make a serious decision to pursue financial success at a level that is your absolute best.

 

By giving serious thought to the three steps that are outlined below you can get a real jump on what you need to do—to make your wealth building dreams come true.

 

You can do more than think about what lies ahead in your life because “you have the power to do so” and you can at this time leave anxiety and the uncertainty that you may feel at this time behind you in the wind—exactly where it should be.

 

Although your future is not guaranteed by any stretch of the imagination there are things that you can do to put yourself and your family in a more favorable position for long-term wealth building success.

 

  • Learn why you must choose success at the earliest time possible…

 

In 2010 the creator of TheWealthIncreaser.com was disgusted about how the financial downturn occurred and therefore decided to create a website (Realty 1 Strategic Advisors) to help those who were affected by the 2008-2009 financial crisis better navigate their financial future.

 

Furthermore—the creator of TheWealthIncreaser.com wanted to help those who were not affected better prepare themselves for the future in a manner where they could better control their personal finances.

 

Even though many visitors came aboard and used the content on the site to achieve greater success throughout their lifetime—others remained unconcerned or uncommitted about their financial future.

 

By frequenting this site at this time you have the opportunity to change the trajectory of your future when others choose to do otherwise.  You can make a wise decision at this time to choose long-term success if you are now ready to give it your best.

 

  • Learn why the time to choose a better path toward success will never be to your liking…

 

You must realize that even though we are in a COVID-19 environment, now is the ideal time that you choose a path toward success that has fewer roadblocks and pitfalls.

 

You must realize at this time that your path toward what you desire will never be perfect or what you consider ideal.

 

Therefore you must make a serious commitment to give it your best at this time so that you can achieve at a higher level on a daily basis.

 

  • Even though the success that you desire may not be near—you must “act daily” as if the success that you desire will appear…

 

It is important that you have faith that what you desire to occur in your future will truly materialize.

 

By frequenting this site you are showing a level of commitment that will stand the test of time and will take you toward the dreams and goals that you have—that are divine.

 

You must take action on a daily basis in a manner that says—success is not only near—success is here.

 

You make happen what you desire to occur most by taking action at a very high level on a daily basis so that you can win the majority of your races (your goals are reached consistently) and make success more likely to occur because you are taking the right paces (moving toward success in a winning fashion).

 

Conclusion

 

By giving serious thought to what you desire most you can achieve at a higher level of consistency and reach toward a higher level of success.

 

You can now think about your future and leave worry, anxiety, fear, frustration, lack of effort and excuses behind–and achieve the type of success that is one of a kind.

 

You don’t have to live daily in a manner where you let uncertainty and anxiety rule the day—if you decide to look at and attack your financial and wealth building future in a better way.

 

Even though others may be in a shell at this time, we are of the opinion that now is the time that you take even greater action and move in a way that can help you and those you love achieve even greater success because you made a “serious decision” and decided to give deep thought to what your future was about–and you were sincere in your actions toward not only moving yourself and your family forward–but society as well.

 

All the best to your “new thoughts” and unlimited success as you move forward…

 

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Timing & Wealth Building in the COVID-19 Era

 

Learn why the time to do what you need to do financially varies depending on where you are now at in your life stage…

 

In the current economy in many parts of the world many are at a point where they must stay in a confined area for a certain time period and/or must keep a certain distance from others due to the COVID-19 virus.

 

Many are using this time wisely and are looking within in an introspective manner to see what they can possibly do better in their life.

 

It is important that you at this time determine where you are now at financially and otherwise—and make the best or most optimal moves “at this time”  based on your current life stage and financial position.

 

In the following paragraphs you can learn how you can use your time more wisely and achieve at a higher level—at this time—and in your future.

 

Plan in advance for uncertain times…

 

You can use your time more wisely by focusing and planning on what you desire to occur in your future.  Many of those who have frequented this site for years are now in a better position than most to handle the uncertainty and anxiety that is now in the atmosphere.

 

Whether it be financial or otherwise you make the likelihood of future success occurring in your life when you plan for success and particularly when you put your planning in writing.

 

You can use personal financial statements to see where you are now at and use the information that is derived from those statements to see where you can go.

 

You must plan for success by knowing how credit works and using that knowledge to manage your credit in a manner that serves your best interests—not creditors.

 

You must plan, pray and take the right posture on a daily basis if you truly desire to position yourself and your family for lifelong success!

 

It is also important that you have a comprehensive overview of your finances so that you can plan daily in a manner where you can win--consistently.  Even if you now find yourself in an adverse position as a result of COVID-19 or other factors you must always know that you can put rebound mechanisms in place and still achieve your goals throughout your lifetime.

 

Know what you desire in your future…

 

You also want to take time—right now—to do some deep thinking to determine where you really want to take your future.

 

What were you put on earth to do?

 

Use the time that you have now to search your soul and determine if what you are now doing or working toward doing is what you were truly put on earth to do.

 

Or is what you are doing at this time something that you must do—but it serves no real end toward making your dreams come true.

 

Use a calming approach (you slow your mind down and receive the inspiration and dreams that were meant for you) and look within at your life and see if there is a better, more effective way of achieving what you really desire.

 

 Do continuous review in order to make your dreams come true…

 

Once you put your plans into action you must still have the mindset that you will do continuous review and fine tune where necessary.

 

You can achieve many of the goals that you may now feel are out of reach if you take the time now to plan—do and review.

 

By doing so consistently you can achieve at a higher level and fatigue and a feeling of doubt will play no meaningful role in holding you back from achieving your dreams.

 

Conclusion

 

You can at this time choose to get down on yourself and remain where you are now at or move along in life at a snail’s pace—or you can use the time that you have to look within and plan for a better and brighter future.

 

You can better prepare yourself and your family for the perils that lie ahead (both seen and unseen) and position yourself to “weather the storm” in a way where you come out in a good position—or possibly even in a better condition than when you were experiencing the storm–or even before the storm.

 

It is the desire of TheWeaalthIncreaser.com that this discussion has led to “a calming of your thoughts” and a feeling of well-being about your future.  Regardless of where you now stand better days lie ahead and you can use what you have learned in this discussion that you feel is appropriate to move forward–to “your” best advantage!

 

In the age of COVID-19 you must believe and know that you will come out on the other side in a stronger position for success—whether it be financial or otherwise!

 

You must also remember that the time to do what you need to do to make your dreams come true will never be ideal.  You are now alive and visiting this site and you have the opportunity to get your future right–in spite of the disheartening news that you may hear on your radio or hear and see on your phone or  TV tonight.

 

Those who have been utilizing this site for years continue to do so due in large part to the calming effect that it has on their financial life.

 

For those of you who are new to this site it is the desire of TheWealthIncreaser.com  that you continue to visit if you find value in this site so that you too can transform your future to that of true success once and for all—whether it be financial or otherwise.

 

All the best to your success during these difficult times and throughout your lifetime…

 

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Preparation & Wealth Building

 Learn why you must prepare for wealth building success and always give it your best…

 

In the current economy anxiety and a feeling of uncertainty is inside the mind and heart of many, however those who have “prepared for success” are less likely to exhibit stress and anxiety at this time (or in the future) than those who “failed to prepare” for success in their past.

 

With the  stock market around the globe fluctuating wildly and the COVID-19 virus running rampant in many parts of the world, many are feeling uncertain about their financial future and their future well-being in general.

 

In this discussion TheWealthIncreaser.com will discuss how those who prepare for success–experience less stress as they move along at the various stages of their life–because they have chosen to give it their best.

 

It is important that you gain a real understanding of the following paragraphs as it can allow you the opportunity to pursue the success that you desire in a manner that allows you to win continuously during your lifetime.

 

Knowledge of what needs to be done…

 

It is important that you have knowledge of what you need to do to make your wealth building (and life) dreams materialize during your relatively short stay while here on planet earth.

 

That all starts with knowing what you need to do  in clear and cohesive terms so that you will know what you need to focus on–and move to action on–during the various stages of your life.

 

Action plan to do what needs to be done…

 

You must know that by preparing in advance by properly establishing an emergency fund at the earliest time possible you are showing a real desire to achieve long-term success.

 

Even though conventional wisdom says that a three to six month emergency fund is appropriate you may have a need for an even greater amount in your emergency fund.

 

If you are a business owner, real estate investor or you like to invest in the markets more aggressively than the average investor you may have a need for an even greater amount in your emergency fund.

 

In addition, you want to prepare for your future properly, therefore you must know your inflow and outflow of cash on a monthly and yearly basis as well as having a real understanding at the earliest time possible of your net worth and what you can do to increase your net worth more efficiently.

 

Furthermore, you must have mastery of how you manage your credit so that you can know if you can possibly manage your credit more effectively.

 

In addition, you must take action in a comprehensive way by looking at and improving your finances in all areas so that you can achieve more throughout your lifetime.

 

Constant review and improvement where necessary…

 

Even though you may have done all of the above, or plan on doing so–the journey does not end there!

 

You must prepare your mind for systematic reviews of your finances so that you can make adjustments and improvements where necessary.

 

You cannot do like others who get complacent and comfortable about where they now are and show no initiative to move forward in a better or more efficient way.

 

You must see the relationship among personal financial statements, credit management and the management of your finances in all areas.  By doing so you can achieve far more and put yourself in position to do what you enjoy on a more frequent basis while you are here on earth.

 

Conclusion

 

By preparing in advance whether it be your finances or any other area of concern that you may have you open up the possibility to achieve far more during your lifetime and you put yourself and your family in a better position for short and long-term success.

 

If you are a college student, just entering or leaving the job market, a seasoned veteran on your job–or you are trying to find a better way to manage your finances you must realize at this time that it all starts with preparing your mind for what you desire to occur in your future.

 

By preparing for your “wealth building success” you can put your mind and heart in position to give it your best.

 

All the best as you give deep thought to your future of unlimited success…

 

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