Real Estate
October 18, 2019
link to facebook link to twitter
More Stories
Seven common mortgage mistakes What to expect in today’s loan process? How to use rental income to qualify for a mortgage How to plan the optimal time to buy a rental property The loan process and what not to do Why waiting for mortgage rates to get better is a losing proposition A factor that can drive your mortgage cost up How child support and alimony can affect your ability to get a mortgage What to look for when getting a mortgage on a manufactured home Why getting a 30-year fixed-rate mortgage is a smart financial move How to lower your cash to close when buying a home What you need to know about securing a VA mortgage How mortgage lender credits work Five quirky refinance scenarios that work Two mortgage loan programs get a better interest rate The #1 mistake consumers make when getting a mortgage… Things that affect your first-time buyer mortgage options Be wary about paying off this type of mortgage Best benefit for your first-time home buyer Why the VA mortgage is the best home loan A bank statement program might help get a mortgage Read the fine print Cash-out refinance or home equity Should you refinance with today’s mortgage rates? Should you buy and build or buy a single family home? Don’t make mistakes when getting a mortgage refinance Home value when refinancing Should you go FHA or conventional for purchasing your first home? Mortgage rate sounds too good to be true Finances matter when buying a home FHA requirement might hurt buying chances How to get a mortgage without providing tax returns The new way to get a mortgage with 1 year income tax returns Four common home buying mistakes to avoid Should you buy a house with monthly mortgage insurance? 2019 conforming loan limits rise FHA loan limits for 2019 increase Working two jobs makes now easier to get a mortgage How much of your mortgage income should be going towards an auto loan? How much are closing costs when you purchase a house? Self-employed income Common questions on financed mortgaged insurance loans A loan program you may be eligible for based on your credit score Can you use roommate income to get a mortgage? Pulling credit may not make sense Cash to payment formula when buying a home Lender knows how to purchase business? Be careful getting a mortgage if you have a bankruptcy How expensive your mortgage will be due to bad credit? A non-traditional program for self-employed mortgage borrowers What you need to know about the mortgage 4506-t document Two mortgage process problems you will want to avoid How the mortgage process gets ugly if you have a difficult picture Could the 30-year fixed mortgage get to 3 percent? Purchase price should not be most important factor Three reasons you should not buy a home Three quirky issues that will hurt your mortgage Why your mortgage payment keeps changing The credit score it takes to get a mortgage How 1031 tax-deferred exchanges work Six to avoid when purchasing a home Mortgage inquiry makes your credit score drop? Transfer property to family and be protected under Prop 13

How to create wealth with your income and finances

By: Scott Sheldon
November 16, 2018

For anyone who has ever thought about getting a mortgage, saving money and getting ahead financially, this is for you. The following is what you should have for the most optimal financial profile.

To purchase or refinance a house you need to have a blend of cash, credit and income. You would want your income to be as high as possible, have a mortgage in your name which helps with tax deductions as well as your credit score, saving money every month and have additional funds in the bank while planning for retirement. Creating and adhering to a monthly household budget would support this scenario. This type of scenario, if followed, will lead to wealth creation and financial opportunities in the future.

You ideally want your income to be three to four times higher than your fixed monthly expenses including your total monthly mortgage payment and any other consumer debt you may carry. The reason for this is, if your income is so high you must remember part of your income is going to be going to taxes before any discretionary spending. Paying off debts and savings comes from your net income. Taxable income can be taxed as high as 50 percent.

For an example if your income is $15,000 per month, you’re only going to net about $7,500 of that money as about half goes towards federal taxes.

You want to pay all your bills on time. Do carry three or five credit cards that you use and pay in full every month. Don’t carry debt even if it is zero percent interest. Use your credit account to keep your utilization of credit low. Self-proclaimed financial gurus will tell you to carry debt, they are wrong. What people fail to realize is it’s not about the interest that you’re paying on the debt, it’s the payments which impact your choices of your cash.

For example, a credit card that has a $500 payment a month on it with a five percent special interest-rate, is worse than a credit card that has a 10 percent interest-rate and a payment at $200 per month. Why? It’s all about the payment. You want to be able to control where your monies go and not have it be pre-determined by a creditor. Most consumer debts are not tax-deductible and they impede your ability to save money.

Assets- this goes back to savings as you need to have the high income to be more credit worthy. The income creates the platform for you to save so your income is not handcuffed by debt.

You should be contributing to a 401(k) through your employer. If you are not yet started, do so right now. Setting up a 401(k) will allow your employer to sometimes even match whatever contribution you put in. You put in $50 they put in $50. Through the course of time this money will grow and accumulate giving you a choice and flexibility over your money and allowing you to use this money for buying a home or other venture.

Ideal example scenario- (it’s not the numbers that should be the most important, it’s the relationship between the numbers that are the most important).

$20,000 per month income

800 Credit score

$50/month in credit cards

$80 in the bank

$40k in 401k

$3,000 new mortgage payment

What do you notice about this financial profile? The relationship between the debt and the income is massive. The bigger your relationship is between your income and your debts the more you will receive each month giving you choice and control over your budget.

Looking for help? Start with a no cost quote now.

Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at