Money Saving Secrets for Real Estate and Homes for Sale


You Don’t Make Money When You Sell Real Estate,

You Make Money When You BUY It!

Dear Future Home Buyer,

Hello! Do you see the statement above? Someone once told me it was written backwards…that you only make money when you SELL real estate. “How on earth could you make money when you buy it?” they asked.

But that statement IS accurate. You see, you might receive your sales proceeds when you sell your home, but it’s how well you BOUGHT your home that will determine HOW MUCH more your proceeds will be.

But the story doesn’t end there. Finding the right home and making a prudent financial investment is more involved than just “buying right.” You also need to FINANCE it right!

Even Experienced Homeowners Make Costly Mistakes

When Buying And Financing Their Home

Hi, my name is Tom Brewer - I’m a Financial Guru & MBA from Georgia State University. I own my own mortgage company, and I’m also a Realtor. I specialize in helping people buy value priced homes…AND with great financing…that most lenders and Realtors don’t understand! Please refer back to my home page for information on real estate for sale in all Tarrrant County cities or more loan information.

It’s no surprise that borrowing $150,000 to $400,000 is a lot of money. How to FIND the right home…how much to PAY for it…and on what FINANCIAL TERMS can literally cost you tens of thousands of dollars!

If you’re like most people, buying a home involves a lot of emotional stress and financial strain - especially if you don’t understand mortgage financing! For most buyers, it’s the single largest financial transaction for them. Mistakes in any part of the buying process could cost you thousands…more than likely - ten thousand dollars or more!

That’s why I wrote this special report for you…to give you a number of helpful, straightforward tips. Follow them and your next house will become a wise financial investment for you - expect to get ‘cheated’ out of thousands if you don’t…

You should understand I’m willing to give you some great “insider secrets” and “financing advice” that most lenders would “cringe” at doing in exchange for you allowing me a “shot” at earning your real estate and mortgage business. I’m the only Realtor and lender in Indianapolis, that I know of, that guarantees to help you save a lot of money on your next home purchase. You’ll discover why they don’t a little further on.

Oh, by the way…the reason I do this is quite simple…if you or any of your friends or relatives are thinking about buying or selling a home, I’d love to help you save a “fortune.” Here are 8 strategies (I call them “secrets” because so many homebuyers disregard them when buying) you should consider when buying your next home…

Secret #1: Understand What You NEED and WANT In Your

Next Home.

Two things you should consider here: Your NEEDS…and your WANTS. They are two very different things. You may need 4 bedrooms because of your children, or need a 3 car garage because of your 3 cars…

What you’ll find is that your needs are fairly basic. It’s the “wants” that take a little more time to clarify. Here is a list of needs you should consider BEFORE looking for your home:

General price range of home – what do you want to pay every month and how much can you afford.

Approximate size of home (in sq. footage) – make a reasonable range

General location, area, or subdivision

Number of bedrooms required (don’t forget to include any home offices or guestrooms).

Number of bathrooms you need – frequently determined by the number of children you have.

Style and layout of home: Do you want a more formal plan, or a contemporary plan with nice room designs, etc.

School requirements or districts

A great way to get a handle on what you “want” is to take a good look at your present home. What do you like about it? Do you like its open floor plan? Do you like the kitchen and eating areas, and are the bedrooms big enough?

List every thing you like about your present home, or homes you’ve visited. Now, let’s take a look at what you don’t like about your home. Do you hate the flat roof? Do you hate the master bedroom layout? Are the bedrooms too small? Is the kitchen too cramped? If you dislike something with your present home, you’re going to dislike it with your new home. So the better you can identify these items, the more likely you are to avoid them.

Understand What Each Other Is Looking For, And WHY

If you’re a husband and wife looking for a home, this exercise will eliminate many disagreements down the road. You will both understand what the other wants, and WHY they want it. I recommend you RANK each feature in terms of its importance to you and your spouse. You’re both going to live in the home, so you better understand what the other is looking for. Also, allocate some time and money to do any future improvements if needed.

For example, a well designed gourmet kitchen (remember, list ALL the features of the kitchen you’re looking for) may rank high with a woman, while having a workshop area in the garage may rank high with a man. Try to understand each other’s priorities. If you don’t, you’re not going to be happy after you buy it

Most People Have More Dreams Than Money

Ranking will also show you areas you may need to eliminate because of price constraints. And by having each person rank the importance of the features they want, you won’t be eliminating a high priority item and putting additional stress on an already stressful time. Don’t forget, bigger rooms can mean buying more furniture to fill them.

Secret #2: Understand How Much Home You Can Afford.

Like it or not, there are 2 guidelines bankers and mortgage lenders use to determine how expensive a house you can afford…

The first guideline is the House Payment To Income Ratio. This compares your income – or your total household income – to the amount of mortgage payment you’re considering. To calculate the “payment” part of the formula, a lender like myself will take the mortgage payment (principal + interest) and add the Property Taxes and Insurance to it. Hence the term “PITI” (principal, interest, taxes, and insurance). Most of the top 25 national lenders will lend around 28% of your total gross household income. But before you think you’re home free, there’s another ratio you need to know…

It’s called the Debt To Income Ratio. Debt refers to ALL the major monthly payments other than your mortgage payment (PITI). To arrive at this amount, a loan underwriter will consider:

…Your car payment, your credit card payments, school loan, any IRS liens or judgment

payments due, and any other payments – including child support you have (boat, 2^nd home, etc.)

Then, they’ll compare your total debt to your ability to make current payments with your new home loan added into the equation. Now, here’s the ‘problem’…each national mortgage company sets different limits on your Debt to Income ratio. Some lend at 38%, while others will go as high as 65%. Do you now understand why some people “qualify” for larger homes – and others don’t! It’s so beneficial to find a MOTIVATED LENDER and why using a competent lender is so critically important! A good broker will find you a match for your exact situation.

Don’t follow the “canned” financial advice like you hear on radio advertisements, see on TV or hear from friends. Most of that advice is “rule of thumb” and designed for the lowest credit rating and highest interest rates. I laugh every time I read the newspaper real estate and mortgage stuff because it is so misleading and is stuff that practically no one qualifies for any way! Think about this…

If you spend 2 or 3 days to find a loan that saves you $40,000 to $150,000 over its term; your time is VERY WELL SPENT! Having a good mortgage broker do a little homework for you will - literally - save you thousands over the term of your loan – especially if you get to buy a bigger house than the corner bank…and get lower payments too.

Secret #3: Save A Bundle When Financing.

Your ability to afford a home will be related to a number of items. They are…

The PRICE of the home;

Your DOWN PAYMENT on your home, and thus the amount financed;

The INTEREST RATE and POINTS of your loan – the amount a bank charges you for the money;

The TERM of your loan: 15 years, 25 years, and 30 years.

The overall TYPE of your loan: the most common are fixed vs. variable rates. But there are hundreds of loan packages to choose from – much more than the “plain vanilla” types you’ve heard about

“There Are NO General Rules Of Thumb About Financing Your Home.”

Each case is different, and your personal financial circumstances will have an impact on how much home you can afford. Experienced homebuyers lose thousands and thousands of dollars because they don’t understand how financing really works. Again – avoid lenders who offer “plain vanilla” type loan programs! Mortgage brokers like myself can almost always beat the “newspaper lenders” – and help you save $36,500…or more.

However, you MUST understand the relationship and impact interest rates, term of loan, points, and type of loan can have on your overall financial picture. Let’s start with the “amount financed” first. Many people often pay cash or put way too much money down when they buy. The reasons they do this are…

“The bank required us to…”

“We’ve just always put down this amount…”

“We wanted a lower payment.”

Problem is, these reasons will probably cost you thousands of dollars. The answer for how much you should put down on your home is different for everyone! However, I have learned over time that…

Most People Put Down More Cash On Their Home Than They Need To,

And Could Have Received A Better Return On Their Investment Had

They Invested The Money Instead Of Putting It Into Their Home

Here’s a simple and fast way to “ballpark” the actual annual return on investment you get from the money you put down on your home:

Take a look at the homes in your area. How much have they appreciated each year on average, over the past 5 years? For example, you might find that values have increased an average of 7.5% a year in most Indy area neighborhoods.

Now, take the total cost of your home, multiply that value by 7.5% (the average expected annual appreciation of your home). For example, a $180,000 home will increase in value at 7.5% for the first year. Thus, the home will be worth $13,500 more a year from now…or $193,500…not bad!

Now, divide the amount of increase in your home ($13,500 in the example) by the total amount of Down Payment you put down. For example, if you put down 20% (or $36,000), then $13,500/$36,000 = 37.5%.

Now a 37.5% return on my investment sounds like a fair investment to me…doesn’t it? But the question you need to ask is this: Can you make more than 37.5% elsewhere?

And did you notice something else here? Had you put down just 10% or $18,000, your return on your Down Payment would be 75%. What if a good mortgage broker found you a 5% down program…do that math…WOW!

What if you could find a bank that allowed you to put zero down? Zero down loans are fast becoming the most “savvy” way to purchase a home! Besides, most zero down loans don’t require mortgage insurance! Would you like $5,000-10,000 in “free money” to invest in a good mutual fund instead of using it as down payment cash…?

I bet I could help you pay for your kid’s college education for free…simply by getting you a $0 money down loan…ever think of that? The moral of the story: Putting more money into your home will make a banker happy, as it lowers the risk of you defaulting on the loan. It may make your overall payment a little bit lower too…but it will almost always be a far wiser decision to put less into your home, especially if you can leverage your home purchase and invest the savings into another investment that pays a far higher rate of return.

You need to run a “Mortgage Loan Financial Analysis” (like I do for all my clients) to figure out what works best for you – and what saves you the most amount of money. Not doing it will cost you thousands of dollars…and from lots of experience…I’ll guarantee you’ll ‘cheat’ yourself without doing it.

SECRET #4: The Great Interest Rate “Scam” – The Big Myth Revealed…

Now, let’s shift gears a little and talk about the impact Interest Rates have on your overall financial picture…

Some mortgage lenders toss around the lowest interest rate numbers as if “the world would come to an end” if you don’t get the lowest rate in the world. The real truth is that rates are important…but the term of the loan is far more important, as well as if you are required to pay “the evil” mortgage insurance!

And to illustrate the impact interest rates can have on your overall financial picture, I’ve presented a table below showing the interest you pay over the full term of a 30-year, $200,000 loan at 8%, 7.75% and 7.5%. And here’s the clincher: although a 1/4 percentage point on a $200,000 loan can cost you almost $12,960 over the term of the loan – MOST Texas homeowners move in 4 to 5 years on average! So the huge savings you “think” you’re getting is really negligible…just $36 a month!!

Even experienced homebuyers fall ‘prey’ to the “lowest rate scam” bombarded upon you by the ‘slick advertising’ you see and hear on the radio…but interest rates are only a small factor…for example:

Sure, you’ll “save” $12,960 or $432 a year in interest ($36 a month) between an 8% rate and the 7.75% rate. But, since you’ll write-off $134 of that $432 savings on your income taxes – you really only save $298 per year – which is only $24.50 a month or about $1490 in 5 years. But, what if I told you a lender I use offers to save you $2900 every year ($241 savings per month) on these exact same loans…at 8%, 7.75% or 7.5% - your choice...

You see, interest rates mean very little when you move every 5 years or so – especially if you get ‘tricked’ by a lender into paying points believing that you need the lowest rate in town – and, especially if you still have to pay mortgage insurance!!! You see, mortgage insurance is required on every loan that has less than 20% equity. It’s profit for the lender for the risk that you could default on the loan. But here’s the “insider secret” of this entire report…

Some lenders combine first mortgage loans with second mortgage loans so you can AVOID paying for mortgage insurance!!! And you don’t need to put 20% down! “Zero money down” helps if you’re short on cash for the down payment and if you are planning on living in the home for only 5-6 years!!!

Zero down lenders get you an 80% loan to value 1^st mortgage, and a purchase money 2^nd mortgage for the remaining 20%. You’ll save over $36,300 by going with a zero money down on a $200,000 home 30 yr fixed rate – because you don’t have to pay mortgage insurance and because you don’t have to ‘rob’ your savings account or 401K to come up with the down payment money!!! These loans are the best kept “secret” in the mortgage business.

So let’s now look at how paying points can ruin or help your financial investment…

SECRET #5: Paying ‘Points’ Is Like “Swimming With Sharks”…With A Cut On Your Leg!

Here’s how to instantly know how many points you should pay. One ‘Point’ is equal to 1% of your total loan, so one point on a $182,000 loan would cost you $1,820. Banks lend money at higher and lower rates – depending on what you need or they convince you into believing you need. Borrow money at a lower rate and you pay ‘points’ to get that lower interest rate…does that make sense…simple enough?

In other words, you “pay” to get a lower interest rate, and this gets you a “slightly lower” monthly payment. It was only $24.50 less (after taxes) in the previous example above. So, another HUGE consideration to “save money” when buying your next home is the amount of POINTS your lender will charge you. And what you’ll notice is there’s a GAME being played with you. And if you don’t know the rules of the game, YOU LOSE! Sitting across from a banker while he throws obscure numbers at you like you’re a human dartboard can be pretty overwhelming. And frequently you’ll hear terms like “7.75% with 1 point,” or “7.5 with 1 1/2 points.” All-the-while you’re thinking to yourself, “I have no idea what the financial impact of this guy’s blabbering means to me.” But quite frankly, your banker knows…

The Less You Know About What You’re Paying - The Better For HIM…

So hopefully this little “ballpark” example will help you quickly determine the best points-to-interest rate for you. Here’s a little help…

If a banker is giving you several options of interest rates and points, you need to sort out the financial consequences so you don’t lose money. Using our previous example, you were considering two loans. Both are for $200,000, and both are 30-year amortization.

DEAL #1: One loan he offers you is at 8% with 0 points…

DEAL #2: Another loan he offers you is at 7.75%, but he wants 1.25 points.

What’s the ONE factor that will determine which loan is better?

How LONG You Keep The Loan!

The first thing you need to think about is how long you’re going to live in that home. The average Texas homeowner spends about 4-5 years in their home before selling for whatever reason. So, for example sake, let’s say you plan to live in the home 5 years. Here’s how you determine which deal is better…

Take the difference in monthly payments (principal and interest only) of EACH loan…

Multiply that amount by 12 months to get the annual amount of difference…

DIVIDE that amount into the $$ amount of points you pay to determine the number of years it takes to break-even. If the number of years is LESS than your anticipated time in your home, you’ll be better off paying the points and getting the lower rate. If it’s HIGHER than you plan to spend in the home, opt not to pay points.

Here’s an Example…

The difference in monthly payments is $36 a month ($1432 - $1398 = $36).

$36 X 12 months is an interest savings of $432 per year.

Total Cost Of Points divided by $432 is 5.78 years ($2,500/$432 = 5.78).

The result? If you stay in your home for 5 years, you will NOT recoup the points you paid up front with the savings in a lower interest rate…you lose. Recoup time is about 5 years and 7-8 months to breakeven. So your best bet would be to select loan #1.

If, however, you planned to keep your home 5 years, 8 months or more, you’d be better off with loan #2, as the overall savings in interest will exceed the amount you paid in points – not considering the time value of money). Are you starting to see how important it is to understand financing your next house and how important it is to shop for the best rates, down payment and points? Do you see how easy it is to get “cheated” when getting a loan?

Good! Now, let’s move on to another important secret for buying your home…a favorite little trick of mine!

SECRET #6: The Loan TERM Is The Most Important To You!

Although interest rates and points have an impact on your overall financial picture, take a look at what modifying the TERM of your loan can do for you…

Here’s another example of a $200,000 loan at 7.75% interest. But this time, we examine the total interest paid when you select a 30-year vs. a 25-year vs. a 15-year amortization…

The “bottom line?” Estimate the maximum amount of payment you can afford, and adjust the TERM to primarily minimize the amount of total interest you’ll pay. You’ll save 400% more money by going with a 25 year loan than you will by having a lower interest rate!!! Has anyone ever explained it that clearly to you?

*TIP #1…I have a lender who will get you a 30-year payment of $1432

like this example – but they’ll give you a 22-year loan instead…saving

you more than $53,956 in interest. (Call me if you don’t believe it!)

But then your banker cuts in and says, “but the interest you pay is Tax Deductible…” And you should know this: If you’re in the 27% tax bracket, for every dollar in interest you pay, you only save 27 cents. If you can afford the slightly higher payments, then get a lower term! Don’t forget, your goal is to save money – yet credit cards and car payments don’t have any tax-deductible interest. If you really want to save money – PAY OFF your credit cards and never carry a balance on them- because interest on credit cards and car payments isn’t tax deductible…!!!

Secret #7: Be Financially Prepared – Ahead Of Time!

Many people go about the ‘home finding’ process backwards. They go through the entire process of searching, evaluating, and writing an offer on a home, WITHOUT being pre-approved for a loan.

First, find a good MOTIVATED lender. No, don’t just go down to your local bank where you’ll likely to be slowly tortured by some “junior loan officer” and his mediocre 30 year interest rate (which I guarantee you’ll pay mortgage insurance on!) Instead, find an expert lender who can explain mortgage insurance pitfalls and give you great financial advice. If they can’t explain any of this - then don’t use them!!! Now, I know if your local banker sees this, he’s going to blow a cork, and start reciting all the ad campaign jargon most banks are spouting these days. But the truth is…

There Is Absolutely NO Incentive For A Traditional Banker To

Serve Your Interests In Any Way

What you want to do is find a mortgage broker who is MOTIVATED to take your loan. If they represent many different products, and can offer you many options for making your loan most affordable, you’ll probably get lower rates and lower terms too.

Here’s another important tip: Never ‘trust’ your Realtor to refer one of their “friends” who’s in the mortgage business… These “friends” may not have your total financial interest as their #1 priority – instead, they may only be working to get your loan closed, so their Realtor friend gets paid their commission. Beware of “friends” that do mortgages… and always get a second or third opinion. Don’t risk your largest investment to an amateur. Naturally, your Realtor and lender both want to see the transaction close – and some Realtors actually have very good lenders, but unfortunately - many do not – and there are plenty of incompetent people in every line of business...especially in Indiana…which has NO licensing or competency requirements for mortgage loan officers!

You’ve got to get PRE-APPROVED before you go out house hunting…NOT just pre-qualified! Why? Because the first question any home seller will ask their Realtor when an offer comes in is, “Are the buyers approved for a mortgage loan? Do they have a Lender Letter?” And rightfully so! Most Indiana home sellers won’t even consider your offer unless a pre-approval letter is attached to the contract! When they accept your offer, their home comes OFF the active market. If your loan falls through, it costs them time and money. Plus, there’s one more reason to get pre-approved…

You Will Have Much More Power To Negotiate

Price And Terms When You’re Financially Qualified!

When you’re pre-approved, the seller knows you’re serious. And a serious buyer ALWAYS has more power to negotiate. So do yourself a favor, get PRE-APPROVED first! And that’s ONE reason why you need a smart Realtor and a good lender representing you during any transaction. It will save you a lot of time, money, and legal hassles.

THE FINAL TIP: AMATEURS CAN MAKE BIG MISTAKES - WITH YOUR MONEY!

Most importantly, you need to know that…

There Are “Real Estate Agents and Lenders”…

And Then There Are Committed Professionals!!!

Which One Do YOU Want Representing Your Interests?

I hope the information contained in this special report has given you helpful advice for helping you find, buy and finance your next home. And at this point, you’re probably pretty clear that in order to find the right home and save money, you need someone very competent and dedicated to represent YOUR interests.

I have recognized this fact, which is why I wrote this special report, and structured my practice around giving the most competent advice possible. I do it to earn more business…as most experienced home buyers still don’t understand how to save “BIG MONEY”…because all they focus on is getting the lowest interest rate!

Getting great mortgage financial advice will save you more money - and make you more money on your home purchase than getting a “great deal” or “the lowest interest rate in town” combined! I’m offering to help you maximize your family’s real estate and mortgage investment…when you’re ready to start looking at houses.

I guarantee everything I do because, simply put, I’m the very best at what I do. I guarantee to help you save $36,500 when you use me to help you buy and finance your next home in Indiana…because I do it all the time!

I’m Not Saying These Things To Impress You…

But To Impress UPON You The Crucial Importance of

Working With A Competent, Dedicated Professional

Buying and selling real estate can be confusing – especially if you get BAD financing! If you are going to buy a house, then you owe it to yourself to let me prove why I’m one of the very best in the business - call me right now at (817)690-9296 and let’s start looking for a really nice home…and avoid the BIG mistakes.

I enjoy working with new clients, and sometimes my practice gets booked up fast. In order to make sure I have undivided time for you, I need to hear from you immediately so there are no time conflicts in helping you.

You Are Taking A Large Monetary Gamble - Want A 100% Guarantee Of Winning…

So call me right now at (817)690-9296, and I’ll immediately arrange a convenient time to meet and share my thoughts on how to maximize your mortgage investment and help you find a really nice home…that makes you money!

Sincerely Yours,

Tom Brewer  817-690-9296

REMAX Associates and Mortgage Specialists LLC