Warren Buffet's Opinions - Most recent 2008 Letter

Finally, its out...like an eager beaver, we read his letters with glee. Just some opinions from Warren Buffet.
His Thoughts on the Economy
"We’re certain, for example, that the economy will be in shambles throughout 2009 – and, for that matter, probably well beyond – but that conclusion does not tell us whether the stock market will rise or fall."

His Thoughts On Future Oil Prices
"Without urging from Charlie or anyone else, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars."

His Thoughts on Holding Treasury Bills and Cash

"The investment world has gone from underpricing risk to overpricing it. This change has not been minor; the pendulum has covered an extraordinary arc. A few years ago, it would have seemed unthinkable that yields like today’s could have been obtained on good-grade municipal or corporate bonds even while risk-free governments offered near-zero returns on short-term bonds and no better than a pittance on long-terms. When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s. But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary. Clinging to cash equivalents or long-term government bonds at present yields is almost certainly a terrible policy if continued for long. Holders of these instruments, of course, have felt increasingly comfortable – in fact, almost smug – in following this policy as financial turmoil has mounted. They regard their judgment confirmed when they hear commentators proclaim “cash is king,” even though that wonderful cash is earning close to nothing and will surely find its purchasing power eroded over time.

Approval, though, is not the goal of investing. In fact, approval is often counter-productive because it sedates the brain and makes it less receptive to new facts or a re-examination of conclusions formed earlier. Beware the investment activity that produces applause; the great moves are usually greeted by yawns."
Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

House market hit worse than expected

Canada Mortgage and Housing Corp. says the downturn in the economy will drive new-home construction to a nine-year low in 2009, a forecast that differs significantly from what the Crown corporation was saying in November.

But Bill Clark, senior economist at CMHC, said it was impossible last quarter to predict the economic decline we are seeing and the impact it would have on the economy.

Three months ago, CMHC forecast 177,975 homes would be built this year. Thursday, that figure was adjusted to 160,250 -- a level not seen since 2000. The forecast would mean a 24% decline from the 211,056 units constructed last year.

"There have been some issues that have come up in the economy that were not foreseen, that's been the case for much of the forecasting," Mr. Clark said.

The drop in construction would mark the end of arguably the strongest housing market in Canadian history, a seven-year run of more than 200,000 units built each year. It would also mean the industry is building fewer than the 175,000 units the country needs based on demographic estimates.

"There has been also a lot of new listings lately," said Mr. Clark, referring to the market for existing-home sales, as one of the reasons for the contraction in new construction. He said consumers have a wider choice in the existing-home market and that's driving them away from buying a new home.

CMHC's forecast says existing-home sales will drop almost 15% this year from 2008 while the average sale price will fall by 5.2% to $287,900. It is predicting a modest recovery in 2010 with sales up about 9% but the average sale price will improve by only $200.

Benjamin Tal, a senior economist at CIBC World Markets, says the lack of liquidity in the housing market makes it difficult to forecast where prices will eventually settle.

"The resale market is basically paralyzed," said Mr. Tal, referring to the fact that year-over-year sales are down as much as 50% in some markets, such as Vancouver. "The market is in a state of shock. Nothing is happening. The prices we are getting now are just a rough proxy. It's not an accurate reading."

Mr. Tal said that as the unemployment rate rises, house prices will fall as people are forced to sell. He doesn't see a correction comparable to the United States.

"The unemployment rate will rise from 7% to 9% but that's still 91% people employed although they will be concernd about their job. What do you do when you are concerned about your job, you save your money. The housing market will be boring," Mr. Tal said.

Hamilton builder Jeff Paikin said he still feels confident in the market and will keep building but like many in his industry he says financing issues are making life tougher for him.

"The banks are making it more difficult to access capital. It is available but on more stringent terms," he says. Where once you could get financing for condominium with 50% of the building presold, the figure is now 65%.

"It is harder to get to that presale level because there is less urgency to buy," says Mr. Paikin. "The pressure is on because you have to get to the 65%, so you can get your financing and start building so the first people who bought into a project don't walk away."

Housing market not collapsing

The Canadian housing market is cooling but is not facing a U. S. style meltdown, builders here say.

"A few commentators have draw an a parallel between the Canadian housing situation and the extreme difficulties in the housing market in the United States," the Canadian Home Builders' Association said in a report yesterday that dismisses such comparisons.

"There is absolutely no merit in drawing such a parallel," the construction lobby said in a report that contends the pace of housing construction in Canada is merely returning to a level that is consistent with underlying housing requirements following the boom of recent years.

"The housing situation in Canada is totally different from that of the U. S.," it said. "There will be some price moderation in some markets, but there is nothing to suggest that housing markets in Canada are vulnerable to the oversupplies and plunging prices that characterize many markets in the U. S.

"We did not experience the same housing boom conditions that occurred in the U. S., and there is no reason to expect that we are in for the serious pain they are currently suffering," it said.

To support its argument that the Canadian housing market is not going the way of the U. S. market, it cited a variety of differences:

-Unlike in the U. S., underwriting standards for qualifying mortgage borrowers in Canada have been maintained at prudent levels resulting in mortgage borrowers here being much more creditworthy.

-Canadian mortgage lenders never offered low initial 'teaser' rate mortgages that led to most of the difficulties for mortgage borrowers in the United States.

-Most mortgages in Canada are held by their original lender, not packaged and sold to third parties as is typical in the United States, and consequently, Canadian mortgage lenders have a vested interest in ensuring that their mortgage borrowers are creditworthy and not likely to default.

Financial Instituitions are Your Friends - Some ramblings about Structured Warrants

We stumbled upon this advertisement in Singapore from a financial instituition and thought what great marketing material it was.

What they wrote seem to imply that their hedging strategies are perfect ( second paragraph) and any gain to the warrant holders are taken from the losses of the warrant issuers' counterparty whom they entered into positions with to hedge their warrant positions. Its not really right to state its a win-win situation between issuers and warrant holders since the issuers are still earning the premiums with no risk ( assuming perfect hedge) but risks still exists for the warrant holders who could still lose the premiums. Maybe this situation exists to " compensate" the warrant issuers for all the hardwork they have done to package such a derivative product.

And the truth of the matter is, in our opinion, its indeed a zero sum game since there is no such thing as a perfect hedge. When warrant holders win, warrant issuers still lose, although, the lost is just minimised. Refer to the following link where it is written :

"According to Financial Supervisory Service data, domestic brokerage houses posted a combined 55.4 billion won loss from equity-linked warrant trading between April and August last year, while foreign houses logged a 1 billion won loss. These warrant issuers failed to hedge adequately against markets moving against them as the benchmark KOSPI jumped 29 percent. "

Anyway, we stumbled upon this somewhere in the internet:

"For the covered warrant, the main concern of the issuer is how to attract the market investors to buy the issued covered warrant when the product is launched. In this consideration, the usual technique for the investment banker is to buy lot of the corresponding share at a low price and suddenly push up the stock price. It then issues the covered warrant at a strike price based on the high stock price. Often they will also support the stock price for a while, but when their warrant have been nearly sold to the market, the stock price will drop. As the strike price of covered warrant is normally quite high, the premium and leverage ratio are also quite high. The high leverage ratio is ideal for investment consideration, but the high premium is very risky, and the covered warrant can easily become "Wall-paper warrant" in bad market situation. Investors should always remember that the issuer of the covered warrant is an investment banker who is VERY EXPERIENCED in market manipulation. When a covered warrant is approaching its expiration date, the issuer will try to beat down the price of the stock, such that the issuer can buy back enough stock from the market to be later distributed to the warrant holders who are willing to exercise the warrant. In the extreme, the issuer may even try to drag down the stock price to make it lower than the strike price. The warrant thus becomes 'Wall-paper' and no warrant holder is willing to exercise it. The warrant issuer thus makes a neat big profit. This normally occurs to the weaker blue chips (there is only covered warrants for blue chip stocks in HK) like Cathay Pacific and Dairy Farm. There are some issuers who are very NOTORIOUS in killing their covered warrant investors! "

See this link for what a dealer said: http://ir.asiaone.com/cosco/news/20061005_001.html

Another blogger post on structured warrants. Level13 Financial Ramblings

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

House Market-Prices continue to fall

The average price of a Canadian home is expected to decline by 8 per cent this year before rising by about 1 per cent in 2010, says a forecast by the Canadian Real Estate Association.

"We are caught in a cycle where consumer confidence has been eroded by job losses, and consumer confidence is an essential ingredient for housing sales activity," CREA president Calvin Lindberg said in a report released yesterday.

The average Canadian home price was $303,594 at the end of 2008, but that should drop to $279,400 by the end of this year before rebounding slightly next year, according to the association that represents realtors in Canada.

Ontario should see prices fall to an average of $279,100, down from $302,354, while British Columbia will see the biggest hit to prices with a fall of 10.9 per cent, followed by Alberta at 8.9 per cent. Newfoundland is predicted to buck the trend, with prices rising by 4.8 per cent this year.

Sales activity is also forecast to fall by 16.9 per cent this year, but realtors are predicting a rebound of 9.9 per cent in 2010, marked by a second-half acceleration based on a recovering economy.

While the forecast is optimistic compared with those of some analysts – who believe the housing market may not recover for several years given the last housing downturn, which saw average prices fall for seven straight years in the Toronto area – the report is in line with other economists who predict the housing market will start to show signs of recovery next year.

"The correction in Canada's housing market continues to unfold and it appears the pace is a bit quicker than we had originally anticipated," Charmaine Buskas, senior economics strategist with TD Securities, said in a note yesterday. "In the face of continued economic weakness, housing may not see a rebound until early 2010."

Canadian housing starts fell 10.9 per cent in January to 153,500 annualized units, the fifth consecutive monthly decline, resulting in the slowest pace of residential construction activity since 2001, according to a separate report by the Canada Mortgage and Housing Corp. yesterday.

"The Canadian housing correction is in full swing, having a wide impact across the country," BMO Capital Markets economist Robert Kavcic said in a note. "With sales activity showing no signs of life, residential construction will be under pressure for most of 2009."

The Toronto Real Estate Board reported 2,670 sales in January compared with 5,075 at the same time last year, a drop of 47 per cent.

The average price was $343,632 – more than $30,000 less than the same time last year.

Meanwhile, a report by Toronto-based Altus Group reiterates fears over the burgeoning condo inventory in the Greater Toronto Area.

According to the housing research firm, 94 new projects were launched in the GTA in 2008, with 55 per cent of units remaining unsold by year's end.

Altus forecasts project cancellations will be more frequent this year as "many projects in the pre-construction stage are far from achieving a sufficient per cent of units sold to obtain financing."

The report says the situation may be less dire than during the housing bubble of the '80s because mortgage rates and investor activity were much higher then.

Changes to limits on number of properties financed

There have been many changes in lending the past couple of years and this post will deal with the maximum number of properties financed. Here is a quick guide to our rules on this:

Fannie Mae (FNMA) and Freddie Mac (FHLMC) have a limitation of 4 maximum properties that are financed. We interpret the rule as follows: If the subject property ( the home you are financing) is a second home or investment home, you can only have a maximum of 4 financed properties. If the home you are financing is your Primary Residence, we do not limit the number of properties that you have financing on.

Summed up: If you are purchasing or refinancing your primary residence, We do not limit the total number of properties that you have current financing on.

For VA & FHA loans, VanDyk Mortgage does not have limitations on the total number of properties you have financed. Keep in mind that you are limited on how many FHA Loans you can have outstanding at one time, and also how many VA loans you can have outstanding at one time. If you have had a FHA or VA loan that have been paid off or refinanced into another type of loan, you can reinstate your eligibility for FHA or VA financing again. Call us for details.

Coming soon: Fannie Mae is changing it's guidelines to allow those purchasing or refinancing Investment properties & second homes to allow up to TEN financed properties. stay tuned!

VanDyk Mortgage has been making FHA loans since 1987. We are a HUD recognized Full Eagle FHA DE underwriter and FHA Direct Lender. VanDyk Mortgage is also a Proud VA Direct Lender. Go with the Government Loan Pros, go with VanDyk. Visit us at http://www.vandykfunding.com/ or call Brian Skaar at 760-752-4480 for help with your FHA loan.

We offer FHA, FHA Jumbo, FHA Manual Underwrite, FHA Jumbo Streamline refinance, FHA Jumbo Purchase, FHA Streamline, VA, VA Streamline, VA Jumbo purchase, VA Jumbo Refinance, VA Cashout refinance, FHA Rehab 203K, VA, Conforming & Jumbo Loans.

We serve the following areas for VA, FHA and Conventional loans: California,Southern California, Northern California, Washington, Texas, Georgia, Florida, San Diego, San Marcos, CA, WA, GA, FL, MO, MI, TX, Carlsbad, Oceanside, Vista, Escondido, Fallbrook, Bonsall, Riverside, Los Angeles, Orange County, Irvine, Corona, Anaheim, Santa Ana, Seattle, Washington, Bellevue, Kirkland, Redmond, Lynnwood, Olympia, Tacoma, Puyallup, Buckley, Auburn, Kent, Federal Way, Seatac, San Francisco, San Jose, Carson, Gardena, Hawthorne, Lawndale, Inglewood, Ladera Heights, View Park, Windsor Hills, Baldwin Hills, Fox Hills, Culver City, Beverly Hills, Malibu, Santa Monica, Brentwood, Calabasas, Encino, Bel Air Estates, Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills, Rolling Hills Estates, Manhattan Beach, Redondo Beach, Hermosa Beach, Torrance, San Marcos, San Diego, Rancho Bernardo, Carlsbad, Escondido, Poway, Oceanside, Vista, Encinitas, Carmel Valley, Scripps, Tierra Santa, El Cajon, La Jolla, Chula Vista, National City, San Ysidro, Santee, Eastlake, Ramona, Long Beach, Artesia, La Palma, Cerritos, Compton, Lynwood, Bellflower, Temecula, Murrieta, Southern California, Northern California, Washington, Everett, Lynnwood, Tacoma, Kent, Federal Way, Auburn, Renton, Bellevue, Redmond, Kirkland, Whittier, Santa Fe Springs, Downey, Irvine, Newport Beach, Los Angeles, San Bernardino, Riverside and Orange County. VanDyk Mortgage is your FHA Lender & VA Lender of choice.

FHA refinances - OK to leave second mortgage in place

FHA refinance - what do I do with my second mortgage?
Answer: FHA refinances - OK to leave second mortgage in place.

With many American families losing equity in their homes, and the loose lending practices of the past few years by the big banks, FHA home loans have become the standard again for both Homebuyers and Home owners wishing to refinance.

One of the myth's about FHA financing is that it is for First Time Home Buyers to purchase homes only. The mission of the FHA (Federal Housing Administration), which is supervised by HUD is to help American Families achieve & maintain homeownership. Achieve = FHA Purchase, Maintain = FHA Refinance.

Many families purchased homes during the past few years using a 80/20 combination loan, utilizing a first mortgage / second mortgage combo to reduce the downpayment requirement. With home values dropping in many areas, families may be upside down, and may have been told by their bank that they cannot refinance their first mortgage since their isn't enough equity in the home to also pay off the second mortgage. Enter FHA. With FHA loans, we can refinance your first mortgage into a safe, secure FHA fixed rate mortgage and leave your second mortgage in place.

One caveat: your second mortgage lender must agree to "resubordinate" their second lien behind the new FHA Loan. Many second lien lenders are willing to do this (resubordinate behind a new FHA Loan), as they want to protect their investment. Their unwillingness may lead to more families making the difficult decision to sell via Short Sale or let their home go into foreclosure. In these cases, the second lien holder often receives little or no money, as the home has dropped in value.

The FHA refinance offers stability, security, and safety for homeowners.

Here is an example of how this works:
Joe & Suzy Homeowner bought their home for $400K in 2004 with a 80/20 loan. First Mortgage is a 5yr adjustable rate mortgage (ARM) for $320K, and the second is a fixed rate second at $80K. Their first mortgage is approaching the first Rate Adjustment Change in 2009, and they don't feel they can afford the new payment. ** CALL US NOW, before you get into trouble! Their home is now worth $340K, so their big bank tells them they do not have a refinance option due to lack of equity in their home. Enter the FHA experts at VanDyk Mortgage. We refinance your First Mortgage into a safe, secure, Fixed rate FHA Loan, and negotiate with the second lien holder to resubordinate behind the new FHA Loan.

Summed up: We can refinance your first mortgage into a new FHA Loan and leave the existing second mortgage in place. The Combined Loan to Value (CLTV) of your FHA loan and existing second mortgage can exceed 100% of your homes value.

Please call for details, 866-900-2342 toll free - ask for Brian Skaar.

VanDyk Mortgage has been making FHA loans since 1987. We are a HUD recognized Full Eagle FHA DE underwriter and FHA Direct Lender. Go with the Government Loan Pros, go with VanDyk. Visit us at www.vandykfunding.com or call Brian Skaar at 760-752-4480 for help with your FHA Streamline or FHA purchase loan. We offer FHA, FHA Jumbo, FHA Manual Underwrite, FHA Rehab 203K, VA, Conforming & Jumbo Loans. We serve the following areas for VA, FHA and Conventional loans: California,Southern California, Northern California, Washington, Texas, Georgia, Florida, San Diego, San Marcos, Carlsbad, Oceanside, Vista, Escondido, Fallbrook, Bonsall, Riverside, Los Angeles, Orange County, Irvine, Corona, Anaheim, and every other city in California.

VanDyk Mortgage is a VA Direct Lender (since 1987) offering VA Loans such as VA purchase loans, VA Streamline Refinance, VA IRRRL, VA Refinance Loans, VA Mortgages of all types. As a Government Direct Lender, VanDyk Mortgage is also a HUD Full Eagle FHA Direct Endorsement Underwriter, ie FHA Direct Lender offering FHA Loans such as FHA Purchase loans, FHA Refinance, FHA Streamline Refinance, FHA 203K Streamline Rehab loans, FHA Jumbo, FHA Jumbo Purchase, FHA Jumbo Refinance, FHA Jumbo Streamline Refinance, FHA mortgages of all types. We offer FHA & VA loans in California, Georgia, Texas, Washington, & More. Visit us at www.vandykfunding.com to get started or just find out more.

Renovation Loans - The solution for REO's, Bank owned, & foreclosures

VanDyk Mortgage is proud to offer our Homestyle Renovation loan. This is a conventional loan that can help you finance the renovation of a new home purchase, or an existing home with a Refinance that includes monies to fix, repair, rehab or renovate your home.

You will qualify for this loan much like a standard Conventional Conforming loan. The nice aprt is that you can add in funds to your loan amount to complete small (minimum $15,000) to large amount (maximum $250,000) renovation projects.

The Scope of work for the Rehabilitiation or Renovation project can include virtually anything that will bring a house to your specs or meet your dreams.

These loans are available up to the Conforming limit of $417,000. We do require a Full Builder Third party contract for completion of the work, no owner-builder or family-builder option is available at this time. You are required to make all normal payments during the construction period.

These loans are a great alternative to the FHA 203K rehab loan. In addition, if you have 20% down payment, you will avoid Mortgage Insurance with the Homestyle renovation loan.

This is a fantastic way to purchase a Bank Owned, REO, Foreclosure, Short Sale, Tax sale, probate sale, or otherwise distressed property, and include the funds to renovate & rehabilitate the property to like new condition (or better in many cases!). This loan does not require a HUD Consultant inspection, however project review & quality appraisal work is required.

The VanDyk HomeStyle Renovation loan is available for primary homes, second homes, investment homes, Single family, duplex (2 unit), triplex (3 unit), fourplex (4 unit), condo's, & PUD's.

Apply online at www.vandykfunding.com. Call the Renovation & Government Loan experts to find out how to structure your next purchase.

VanDyk Mortgage is a VA Direct Lender (since 1987) offering VA Loans such as VA purchase loans, VA Streamline Refinance, VA IRRRL, VA Refinance Loans, VA Mortgages of all types. As a Government Direct Lender, VanDyk Mortgage is also a HUD Full Eagle FHA Direct Endorsement Underwriter, ie FHA Direct Lender offering FHA Loans such as FHA Purchase loans, FHA Refinance, FHA Streamline Refinance, FHA 203K Streamline Rehab loans, FHA Jumbo, FHA Jumbo Purchase, FHA Jumbo Refinance, FHA Jumbo Streamline Refinance, FHA mortgages of all types. We also offer Direct Lender Loans such as Conforming Fixed, Super Conforming Fixed, Jumbo, USDA, Homestyle Renovation Loans, the VanDyk Rehab loan, and more. We offer conforming, FHA & VA loans in California, Georgia, Texas, Washington, & More. Visit us at www.vandykfunding.com to get started or just find out more.

Rehab Loans for Investors

Rehab Loans for Investors - Buy, fix, & sell homes.

We now have a source that offers Investors the Cash to purchase & rehabilitate homes. With this loan, you can buy the home and get the funds for the rehab project all in one loan.

Let's say you have found a home for sale that is in dire need of serious work. It needs a new roof, kitchen remodel, bathroom remodel, etc. The home is available for $110K. Let's assume that if it was in good shape it would be worth $200K. It needs 35K in repairs. This rehab loan can lend you the money to buy it ($110K) and the money to repair it ($35K) all in one shot.

After completion of one successful Rehab project and subsequent sale of property, you may qualify for an open line of credit to purchase more projects to rehab & sell.

This loan is a key ingredient for Home Flippers. It gives you the financing help to make your project successful & profitable.

These loans are not designed for owner occupied or second homes. Investment properties only, and 1-4 unit residential properties. This loan has no prepayment penalty.

The initial key to how much you can borrow is up to 75% of the After Rehab Value. (50% of the ARV in Detroit & select other markets).

Call us to get started - 760-752-4480 or send us an email at rehab@vandykfunding.com.

Fast Mortgage Payment Plan

Creating a fast mortgage repayment plan can save you a bundle. Having such a plan is itself a revolutionary idea. Action delivers guaranteed results. Here are key components to include that will save your mortgage dollars counted in the $100,000.00's.

New and revolutionary mortgage payment discoveries explain how Consumers in Canada, the United States, the UK, Australia and the Commonwealth, give away huge amounts of money, freely every week or month with each mortgage payment. In fact this is true around the world for almost all Borrowers. We pay our mortgages and loans on terms dictated by the Lender without the expertise of a new wave of professionals who specialize in turning debt and mortgage payments to the financial advantage of the Consumer.



This article is restricted to mortgage payment practices in Canada and the United States, since these are the mortgage markets most familiar to us. Lenders extend their loan repayment terms over 15, 25 and 30 years for maximum profits on the loan. Consumer Mortgage Repayment Specialists could shrink those profits by thousands of dollars depending on their experience and skill at saving you excessive and unnecessary payments. With some coaching, you too could divert new dollars to pay off the home loan in record time with big savings. You would create these savings from Mortgage over payment if you could reduce taxes, eliminate excessive interest charges and shrink other payments on the loan. Success with the new way to pay means an early end to payments for an extended number of months. These are payments that in fact, are entirely un-necessary but you think you must make because usually you follow the Lenders' Plan.

Canadians, for example, are allowed tax deductions for retirement savings, as business expenses, and as tax credits for the costs of money used for investment purposes. Unfortunately, many Consumers forgo these allowable tax deductions. These lost tax dollars could be utilized efficiently to reduce excessive mortgage interest payments.

Citizens and Residents of the United States of America too, as Borrowers, have become desensitized to this huge wastage in mortgage costs because of:

• Record low interest rates recently
• Rising house values followed by the sub-prime mortgage fiasco
• The fact that Americans can deduct interest costs on their taxes and
• Aggressive home equity loans by Banks and Mortgage Lenders so that the average North American Home has become a virtual ATM Machine loaded with instant cash available to the Home Owner to spend

As a result, Borrowers and Home Owners continue to add their hard earned dollars to huge Bank Profits, unwittingly. We lack fundamental knowledge about how best to make mortgage payments and home equity loans work in our best interests. New approaches to faster mortgage payments show results very early. Savings of $10,000.00 in one year are not uncommon. About $30,000.00 of savings after three years of payments is almost always achievable. Any good early, mortgage re-payment program can cause the disappearance of as many as 70 to 120 months of mortgage payments you no longer must make. In order to succeed, the Borrower must follow with discipline, a skilfully designed and specific fast mortgage repayment plan that applies money concepts differently.

This is a complex field. Consumers do not know which story to believe. How do you separate the genuine Mortgage-Payment Wiz-Kid" from the fraudulent, scam Artists and Pushers of get-rich-quick schemes that never work?

The News Media generally favors an easy and sensational story like credit card interest, pay day loans, or the recent surge in foreclosures. Academics, Statisticians and Researchers are not generally practical in their approach to these problems. Professionals in the Mortgage and Loans Industry have been funded largely by the Lending Establishment. Almost all of them, including the brightest ones work for Lenders. As a result, Consumers have been abandoned, left to the mercy of Bank Profits and Mortgage Loan Officers' fees. What compounds the problem even more is the multitude of self made "Specialists", who in fact know little about the subject. Many of those who comment on fast mortgage payment options may hardly have basic college level math. Some may not ever have had any practical experience in paying a mortgage. You are reading. So here's your mortgage how to tip.

The most important tool for use in designing a good mortgage repayment plan is an amortization schedule that lists all payments from Payment #1 to the Final Payment. To design a good plan, you must compare and contrast different repayment scenarios for that mortgage. The average Canadian mortgage contract is written so that the loan will be repaid in 300 Payments. American mortgages get repaid in 360 Monthly Payments, generally.

You must know and include the impact of related financial decisions such as taxes, retirement savings and investments etc. Even additional fees and costs must be considered. Three key components of your plan make a big difference in delivering dollars into your retirement account because of your skill in devising a clever mortgage repayment strategy:

The first of these components is the frequency of compounding and the frequency of payments. For example, Canadian Lenders do not exact a fee for changing from monthly payments to a bi-weekly mortgage repayment schedule. Many American Lenders charge such a fee. In Canada therefore, it is standard knowledge that you would reduce the number of years of payment from 25 to around 22 years by simply changing to a Bi-weekly mortgage payment schedule. A good plan from the new breed of Mortgage Payment Planners would pay off that mortgage in 10 to 12 years.

The second major planning component is the application of tax rules to benefit the Borrower. Our generous Uncle Sam allows US Taxpayers to deduct the interest on the mortgage loans on their homes to a maximum loan size of one million dollars. Canadian Mortgage Payment Planners, however, must distinguish themselves by devising various schemes to make the Canadian Mortgage Interest Tax deductible. Clever yet perfectly legitimate tax planning schemes could make a difference in your mortgage costs to the tune of tens if not hundreds of thousands of dollars.

Thirdly, a clever investment program that is closely integrated with the mortgage repayment plan could free you, the Borrower from loan payments much sooner and leave an Investment Account at the end.

Consumers have been diverted successfully to focus their attention on the low interest rate game. They are also enticed with other gimmicks such as interest-only payments, 100 percent financing, cash back from the mortgage at closing. These offers sedate and distract us from the real meaningful issues such as the time it would take to repay the entire loan. How much does the mortgage really cost? Such costs must be counted in before tax dollars and in after tax dollars. What are the penalties, fees and costs for early repayment?

A fast mortgage payment plan that ignores any of those three key components above is an Amateur’s Plan. Unfortunately, most mortgage pay off plans do not include such considerations. At the time of approvals and funding, Consumers become overwhelmed with the mortgage process. Even professionals, like dentists and doctors, teachers, nurses and police, even accountants and financial planners can be so intimidated with the experience that they accept the Lenders' Payment Plan without question.

That payment plan usually has a built-in, profit pool to be counted in the hundreds of thousands of dollars over the life of the mortgage. The new breed of Mortgage Payment Specialists knows how to design a Consumer friendly, Mortgage Payment Plan that integrates tax issues, compounding frequency and investments. All three components, when skilfully integrated into a mortgage payment plan, deliver savings counted in the hundreds of thousands of dollars over the life of the mortgage.

Already you can see that the overwhelming majority of Borrowers do not usually create their own specific, mortgage payment plan. Those who do would not have the tools to integrate tax planning, payment and compounding frequency, in addition to investments into their plan. So you must consult an expert who has those skills. Since space does not permit, we will end here. Later on, we will explore the real benefits of a Fast Mortgage Payment Plan. In another article, we will explain the magnitude of those savings in numbers the size of which once again are too often misunderstood.