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When something new and innovative arrives, it is important
that you break through the confusion and competitive
clutter to find the truth about the product you
are considering. Some myths and misconceptions
have already
grown up around the Australian Mortgage, and we
would like to clear them up for you. This is not a
multi-level marketing opportunity; there is no
expensive software
to buy; only a LICENSED and CERTIFIED Mortgage
Planner can offer you this product
At Freedmont
Mortgage, only a select few of our Mortgage Planners
are
trained
on this product
and we are the market leader
in The Australian Mortgage:
Myth #1
You can match the performance of the Australian
by pre-paying your current mortgage. TRUE
Paying
extra each month, making an extra annual payment
or adopting a bi-weekly payment plan will all
reduce your loan term and save you interest.
However, when we surveyed consumers about pre-paying
their
current loan, most said they did not follow
through:
Pre-paying locks up the funds permanently, unless
you refinance or use a home equity line of credit
to get it back. If you sign up for a bi-weekly
payment plan, you are also locking yourself into
26 annual
payments, further restricting your flexibility
You would never put all your spare cash against
your mortgage, even if you did pre-pay it.
The Australian Mortgage maximizes your pre-payments
and interest savings because it allows you to:
Flow every spare dollar you have against your loan
balance until you need it for bills or investments.
Withdrawal it immediately in the event of emergencies
or investment opportunities.
No other loan offers such flexibility and financial
power. This loan is a home equity line of credit
that allows unlimited payment and withdrawal
privileges. No fixed monthly payment is required if
you are
below
your line's credit limit. Conversely, you can
deposit every dollar you earn into the account until
you
need the funds for bills or long-term investments.
Bi-weekly
payment plans are attached to traditional mortgages
to increase pay-down speed, but they offer no
withdrawal privileges and lock you into a strict series
of
payments.
Myth #2
Ordinary spending becomes long-term debt through
the Australian. FALSE
This
myth grew out of the fact that you pay all of your
bills from your Australian account to maximize
the value of your cash. However, your monthly incoming
cash flow more than offsets your monthly bills,
so your balance trends down, not up. If you did not
deposit
your monthly income into the account and still
used it to pay bills, your balance would increase.
So, we
do not recommend this loan for people with negative
monthly cash flow because we don't want ordinary
spending to drive up long-term debt.
Myth #3
An adjustable interest rate is too risky. FALSE
The
total cost of a loan is driven by rate, balance
and term. . A higher-rate loan will cost
less than a low rate loan if you reduce the balance
quickly. Also, adjustable rates may be more volatile
than fixed rates, but you pay a premium for the
security of the fixed rate. Over time, adjustable
rates usually
match or beat the performance of fixed rates.
So, deciding not to take out the
Australian
Mortgage solely because it has an adjustable
rate is making a long-term decision on a short-term
consideration.
You need to analyze the full picture before deciding.
FOOTNOTE:
While the majority of lenders are experiencing
record delinquencies (above 5%)and foreclosures
(record
highs), The Australian Mortgage has a delinquency
rate
of approximately less than one half of one percent--
a statistic every lender would kill for! The
average borrower has a credit score of 732 and
an equity
position of under 85%. A main risk in adjustable
rate loans
is placing the wrong borrower in them and that
is from loan officers who lack training; morals;
or both and
borrowers who take loans which are nor designed
for their specific needs.
Myth #4
The starting interest rate is higher on the Australian
Mortgage. IT DEPENDS
First,
you have a range of margins available on the
Australian. If you buy down that margin to .75%,
your starting interest rate might be very competitive
with today's fixed rate products. Second, this
loan focuses on balance reduction instead of
interest rate.
If you have the cash flow and/or reserves to
attack your balance aggressively, the interest
you save
will more than make up for the jump in your
starting interest
rate. Third, the Australian is tied to the 1-month
LIBOR index, which is currently above its historic
mean. That means it is as likely to drop as it
is to rise over the next few years. So your
current rate
may be higher than your current loan, but adjustable
rates go down as well as up, and you may end
up with a better rate on the Australian over
time. Moreover, interest rate is not as important
as actual cash flow. We have shown clients
their scenario
at today's rate and also at DOUBLE today's rate,
and in most cases, the higher rate only added
a few months
to the payoff.
Myth #5
You have to put all your savings in the loan to
make it work. FALSE
We
recommend that you put your savings to the
best possible use. Checking account balances
and emergency
funds kept in CDs usually earn less than your
loan's interest rate, so it makes good financial
sense
to move those funds into the Australian. But,
if you can
earn a better return investing your savings elsewhere,
it makes no sense to leave the funds in the Australian.
Plus, whenever you have cash reserves earning
less than your current interest rate, even temporarily,
it would make sense to deposit them into the
Australian
to reduce what you owe and save interest until
you find a better investment opportunity.
Myth #6
Consumers have little discipline so access to home
equity is too tempting to abuse. FALSE
We
give our clients more credit than that. We
offer The Australian Mortgage to people with
excellent credit
and positive cash flow. They already exhibit
a
strong ability to manage credit. In fact, we
have not seen
any change in the financial behavior of the thousands
of people who have already adopted the Australian.
Indeed, Australian clients report that the cash
flow benefits of this product induce a more
conservative approach, because every dollar saved
now has a
powerful
impact on debt reduction. Finally, we know that
good-credit people already receive endless
offers from credit card
sellers and bank peddling traditional equity
lines of credit. We are not giving our clients
equity access that they don't already have.
Myth #7
Better to get a low-rate mortgage and invest extra
income. FALSE
The fact
is you can do both. If your goal is not to
pay down your mortgage debt until you retire,
you can still use The Australian Mortgage to
maximize the power of your cash flow before you invest
it
(income
flows into this account, saving interest, until
a good investment opportunity arises), or in
between investments
as an extremely powerful sweep account. And,
as you approach retirement and begin to re-balance
your
portfolio,
the relative return on the Australian may complement
your overall strategy even more. Finally, when
you do retire, you may still cash out investments
and pay
down your home loan. But, with the Australian,
you can pay down the balance without closing
the line,
so you can still support long-term investment
plans well into retirement.If you need a referral
for
a CPA, Financial Planner, Attorney, Estate
Planner, etc, click
here.
Myth #8
This is a product for everyone.
FALSE
No, this is not a one-size-fits -all product. In
fact, we advise some people to not take this
loan based on
their current situation and cash flow. At Freedmont
only a select few of our Mortgage Planners are
trained to offer this product and these Planners
must continually
take certification courses and training. In fact,
we discourage some borrowers from taking this
program because it is not the right product for
them. Conversely,
if this is the right product for you but your
credit scores are too low, our trained mortgage
planners
can
help you raise your scores with our online credit
simulator provided your cash flow and situation
warrant the benefits
of this unique product.
Myth #9
This is a multi-level marketing opportunity. FALSE
No, you will not have to buy any expensive software
or sign up your friends for this program. Your
neighbor, mechanic, brother-in-law, etc. will
not be able to
offer you this program. Best of all, the best
part is: "set it and forget it"! You set
up the program and we offer you a concierge for
the first
3 months to help you set up the new account and
answer any questions-- basically, your personal
coach, free
of charge (one reason why this is so successful
and has a low default rate). If you prefer the
MLM version,
we are able to offer the UFirst Money Merge Account
and can show you a side by side comparison.
Myth #10
Other firms tout similar programs. Why should
I choose Freedmont Mortgage? TRUE
Other firms
do offer similar programs but Freedmont is
one of the oldest licensed lenders in the area
with a reputation beyond reproach. We never were
involved in the "flipping" fiascos; we
have spoke out for years against the pay-option-arms
(the negative
amortization loans so many people are in trouble
with now); and we are called on by government
agencies, class action attorneys and consumer
groups not
only
for our expertise, but because of our reputation
and history. Our CEO is the weekly expert on
ABC TV News
and on various radio stations throughout the area.
You can find a few other firms offering similar
programs, but like our slogan reads: "Don't
make a 30 year mistake by choosing the wrong
lender! ".
We urge every consumer to take advantage of our
online credit score and simulator so another
lender will
not try to take advantage of you and of course,
you can
always count on Freedmont Mortgage for a no-obligation
2nd opinion.
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