Mortgage planning

Mortgage planning is the initial and ongoing strategic and mechanical integration of a mortgage loan structure to increase effectiveness of a long or short term financial plan or investment strategy; Ultimately limiting debt exposure, controlling tax liability, utilizing arbitrage strategies and managing liquidity to effect a greater net worth over a given period of time.


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This is effectively the same as financial planning but rather than being centered around securities and insurance management, mortgage planning is centered around real estate equity allocation and debt management[1].

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Just as of August 2006, the Chicago Federal Reserve released a study [2] on the very principles mortgage bankers and financial advisors have been practicing and preaching for years. The study, "The Tradeoff Between Mortgage Pre-payments and Tax-Deferred Retirement Savings", breaks apart the difference in tax arbitrage of pre-paying home equity compared with reinvesting those monies into TDA's. The missed opportunity iscompounded growth of monies of which the equity position in a home has no equivalent means of accumulating. The result of following these arbitrage concepts create 11%-17% greater cumulative net worth.








Unlike mortgage lending prior to year 2000, the loosening of credit markets and investor guidelines have supplied a vast array of products, structuring and debt instruments available today that complicate the "which way and how" variable. The various integration of 6+ types of mortgage insurance [3], infinite combination-loan scenarios, simple and deferred interest debt instruments and a borrower's financial portfolio of liquid assets, create a financial sludge to be waded through in determining mathematically the best outcome when purchasing or refinancing real estate. Typically, only designees holding CMPS, CMB, CFP, CCIM or some other equivalent certification are knowledgable experts of the fundamental principles of real estate finance i.e.; effective rates, taxation and leveraging, arbitrage strategies, velocity and time-value of money concepts.

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Mortgage planning concepts are utilized to help consumers with a large variety of needs. Some of the strategies include developing a cash flow priority model, increase personal cash flow, become debt free, profitably leverage real estate, capitalize on taxation benefits of income/capital gains/estate taxes, improve credit scores, maximize capital preservation in divorce situations, finance a child's education, financially care for elderly family, cushion job or career changes, preserve wealth when buying or refinancing real estate and so forth.

External links

http://www.chicagomortgagefinance.com/financing/mortgageplanning