For Small Business Owners & the Self-Employed

Insider Secret:

Debt Free Purchase Power Plan!

How to save a few hundred thousand dollars and be completely debt-free in 7 years or less

by Stephen Argen
Mortgage Planner

Although Mortgage interest rates are at their lowest in 30 years, refinancing your home should only be done if the numbers make sense.  Too many home owners and businesspersons are under the impression that the only time to refinance is when interest rates are simply "2% lower".

This old "rule-of-thumb" is an over-simplified answer to a question that requires a thorough analysis by a competent professional.  Oftentimes, even a small reduction in interest rates will prove highly beneficial.   When combined with personal and business debt, a refinancing option not only makes sense, it can literally save you a couple of HUNDRED THOUSAND dollars!

When a small business owner considers refinancing, the total household's business cash flow and equity position should be analyzed.  Each item of income and expense for the business and for the owner personally should be combined on one statement.  This "before" analysis will determine the total amount of money being spent each month.

A competent mortgage planner can then help determine an "after" analysis, restructuring the total debt into one or two LOWER monthly payments.  A comprehensive plan and appropriate mortgage program can usually free hundreds of dollars per month.

This money can then be reinvested as principal into the fixed rate mortgage to drastically reduce the term of the loan.  The small businessperson can payoff all company debt using his home as equity and then structure a loan from the company back to the owner.  (Obviously there are many factors to consider, so you should check your particular situation with a professional mortgage planner.)

The following example will illustrate the potential cost savings of the Purchase Power Plan:

"Before" Analysis (assume the following facts):

• Home Mortgage  (15 years remaining) = $100,000 with a $1,450 monthly payment

• Vehicle Loan = $12,500 with a $425 monthly payment

• Business Debt (7 years remaining) = $50,000 with a $1,050 monthly payment

• Total Debt = $162,500 with a monthly payment of $2,925

"After" Analysis (assume a Cash-Out Refinance)

• New Home Mortgage (15 Year, 7% Rate) = $175,000 with a total new monthly payment of $1,572

• All debt (vehicle and business loans) have been paid in full

• You continue to pay-off the mortgage at your PREVIOUS monthly payment of $2,925 and;

• Your home is completely paid off in 6.15 years and you've managed to save $153,990 of interest costs!

Households who pay their bills on time and who usually have one mortgage payment  are the best candidates for the Purchase Power Plan.  Oftentimes many of my refinance candidates aren't even aware of the fact that they may be able to save 15 to 20 years on their mortgage and hundreds of thousands of dollars in interest payments.  

(This scenario only works, however, if the debt is refinanced and if the resulting cash flow is re-directed back toward the additional principle.)

Usually there are no "out-of-pocket" costs to refinance your home except for an appraisal.  Nonetheless, it does cost money to refinance.  This cost, however, can be added to your new mortgage amount. The mortgage lender is required to provide and disclose a Good Faith Estimate before you close on your loan within 3 days after mortgage application. 

If the money and time saved outweighs the cost to refinance, then and only then, should someone refinance or "tune up" their household and business debt.  

The example above shows a person being totally debt free in less than 6.5 years and saving over $153,000 simply by restructuring their debt!  

As a small businessperson, you owe it to yourself to have a professional mortgage analysis done, so you can see for yourself just how many thousands of dollars you can save.

Stephen Argen is CEO of North Atlantic Mortgage Corp.
He has over 16 years of real estate finance experience and has helped hundreds of people save thousands of dollars. He may be reached at 1-800-784-9088 or by visiting his website at www.NorthAtlanticMTG.com