I’ve been reading various blogs on personal finances and I found one that had as much good advice as it did bad or misinformation.

The first thing that got me going was the Good Debt vs Bad Debt comment.

Now, a little background on me. My perspective is that the industrial age and it’s mode of thinking is dead. People need to realize this and change accordingly. My belief is that if you want to retire… EVER… you had better be working on some kind of business on the side or some kind of passive income opportunity. For me, that opportunity is in the form of real estate and eventually (hopefully) this blog will contribute as another source (multiple-streams of income).

Now, from that perspective (real estate) the ONLY good debt is a debt that someone else is paying for. In the case of real estate, your tenants pay rent and hopefully enough to cover the cost of the mortgage & taxes. If not, your real estate “investment” is really a monthly expense.

Again, my view is, if you invest in real estate, you want to be cashflow positive from day 1. If the investment your looking at is close, consider it if you think you can reduce expenses some way, otherwise repeat after me “NEXT”.

There are lots of properties and opportunities out there. Don’t get hung up on just one deal. If it doesn’t work, move on.

That’s good debt, something which that is paid for via another source of income (rent or automated business).

Bad debt is everything else.  Credit cards, loans, your home mortgage, etc.

Think of it this way, if you lose your job tomorrow, how do these debts get paid? If the only way they are covered is your employment income, that’s bad debt!

My mortgage is paid. Therefore I have an asset. Right? Well, yes & no.

You still have utilities to pay & taxes, so it still costs you each month. You do have a possession which has value and can be sold if a market exists.
The definition of an asset should be something that pays YOU each month.  So again a property with positive cashflow each month or an automated business that covers all expenses.

Now I agree nothing is perfectly maintenance free, things ware out, tenants need replacing, etc. but these things are accounted and budgeted for.

That’s my rant for the day. Thanks for reading.

I’ll try and cover off other misinformation on future posts.

Now, I know what everybody is thinking.

Here’s a mortgage broker, been in the business for awhile, knows the lenders well enough to get himself a good deal or at the very least should  be able to buy down his own rate?

Well, I’m here to tell you otherwise.

Yes, I went mortgage shopping for myself. I figured I knew enough about various lender products and naturally my own financial position. Examined the various products available and started making calls.

First lender, the name seems similar, is this mortgage for you personally? Yes (wrong answer apparently). Oh, I’m sorry. We don’t lend to mortgage brokers, lawyers or appraisers. This is considered a conflict of interest.

I tried a few different approaches, but the end result was the same for this lender. No problem I thought I’ll go on to the next lender. Lenders 2,3 & 4 all said the same thing. Conflict of interest.

I was starting to get a little nervous now. My A & B plans were shot down. Talk with one of the other brokers in the office. “Oh, yes this is a good way to find out who the really flexible brokers are that you deal with. The large majority wont even look at your file.”

Gulp. The suggested the lender of last resort. They said “no problem”. Then they gave me the terms and I almost chocked. Ya, let me get back to you on that.

On to plan X & Z. Lender Z. Well, we can lend to your wife. REALLY! Cool. What information do you need. I supply the information & wait… and wait and wait. Meanwhile, the house we are purchasing has a finance condition that is slowing running out. And wait and wait some more. I call the rep. EVERYDAY. Every 4 hours. Well? What’s the hold up? This is happening. That’s happening. Should have an answer today/tomorrow/realy soon.

I managed to get my financing waiver extended….3 days. I get tired of not hearing back so I go to plan X. The lender everyone has been telling me about for odd situations. I submit the application.  Less than 24 hours later, I have a commitment. YESSSSSS!!!!
Most people wouldn’t have been happy with what they offered, but compared to the lender of last resort, it seemed like a dream.

So, for those that have been through the wringer with their bank or wondered why their broker didn’t get back to them as quickly as they hoped and when they did the deal was just OK. Your not alone. It happens to brokers too.

At this point, I’m glad that a) I’m married (to a wonderful wife), otherwise I wouldn’t be moving at all. b) my wife’s credit score was much higher than mine, making the deal “acceptable”.
It was a learning experience for both me and my wife. Next time, I’ll just tell her things are going fine and that the extension of the condition is just a precaution…

Nope that wouldn’t work either. Fortunately my wife, at the best of times is a little impatient, managed to not kill me before lender X pulled this one out of the fire. It was touch and go there for a few days.
“Wait! What finally happened with lender Z?” I hear everyone asking. The lender rep assured me that I would have a commitment in my hands the day the condition expired. Guess what? The day after the condition expired, they declined it. I can only imagine what would have happened if I had not gone to lender X.
The conclusion I seem to be coming to lately is the longer a lender takes to give you a response, the less likely you are to get a commitment. If you do get a commitment, then the conditions are… well how should we say this… excessive?

Well, that’s my quick story.

Now back to unpacking my house.