Jordan Goodman is often called the money-answers man. He has been giving advice on money for decades after starting his own newspaper and working for Money magazine for 18 years. Jordan has been on just about every major network and many national radio shows talking about money as well. On today’s episode of the InvestFourMore Real Estate Podcast, I talk to Jordan about money and real estate. He has many great ideas and simple things people can do to save money, pay off their mortgage faster, or invest better with real estate.
How is Jordan qualified to talk about money?
Jordan grew up wanting to be a journalist. He went to Amherst College and received his masters degree from the Columbia University School of Journalism in 1977. Jordan started his own newspaper, reaching 4 million people per week before working for Money magazine. Jordan worked for Money for 18 years, teaching people how to save, invest, and take care of their money. Jordan has appeared on The Today Show with Ted Koppel and has written 14 books.
What does Jordan think about investing in real estate?
Jordan has learned a lot about money over the years. He loves real estate as an investment, especially when traditional investments like CDs and money market accounts pay almost nothing. Jordan loves to give people an easy way to invest without buying houses. He likes secured real estate funds, which is like crowd funding. The difference between secured real estate funds and most crowdfunding sites is secured real estate funds are leveraged against many different projects instead of just one.
Secured real estate funds earn 8% interest, and investors can start with as little as $5,000. The fund lends money to real estate investors at a maximum of 70% of the value of the property. The money is used for a variety of real estate projects, from rehabs and commercial properties to new construction. You can find out more at http://securedrealestatefunds.com.
What is mortgage equity optimization?
If you watch real estate videos on YouTube at all, you have seen the ads about paying off your house early. Jordan talks about what those programs are all about and how they work. Basically, this is mortgage optimization:
- A homeowner gets a home equity loan on their property but keeps their first loan in place.
- They use the home equity line of credit to pay off a chunk of the first loan.
- A homeowner uses the home equity loan as a checking account. They deposit all income into it and pay all bills with it.
- Because the home equity loan interest is calculated based on a daily balance, paying everything into the line can reduce the interest on the loan.
- As soon as the line of credit is paid off, the homeowner takes out the full balance of the loan again, pays down their first mortgage, and repeats the process.
Jordan talks more on the podcast about how this works. It is not for everyone, but it is a great way to help people build wealth and equity when they are not very good savers.
What is the Heroes Come First Program?
Jordan also helps people through the Heroes Come First program. This program allows heroes (EMT, Firefighters, Military, Police, and many others) to get a discount when they buy houses. The way it works is real estate agents who agree to take part in the program will refund part of their real estate commission to heroes. Real estate offices can also sign up for the program to gain more business.
How to get in contact with Jordan
Jordan has a ton of experience in the money business and in using money more effectively in real estate. You can hear Jordan on his own podcast: The Money Answers Show and on his website moneyanswers.com.
[0:00:14.0] MF: Welcome to the InvestFourMore Real Estate Podcast. My name is Mark Ferguson and I am your host. I am an active real estate investor. I flip 15 to 30 houses a year. I've got residential and commercial rental properties. I’m an agent with nine people on my real estate team who sold thousands of houses over the years, and I talk about what's going on in my career as well as interview other amazing agents, investors, landlords, flippers, wholesalers and companies who can help those people succeed. I want to give a quick shout out to my sponsor, Patch of Land. They funded a flip for me in six days. I emailed them on a Sunday afternoon. They responded in less than 15 minutes. They have rates below 8%, work in 45 states, will fund 85% of the deal and fund the repairs as well. Great company, who I love working with, Patch of Land.
For my podcast listeners, I've a special discount page for my products, investfourmore.com/discount. That's investfourmore.com/discount. We’ve got coupons on all my coaching programs. Some of those programs involve calls with me, consulting, video training, and much, much more.
All right, let's get to the show.
[0:01:47.6] MF: Hey, it’s Mark, and welcome to another show. Today, I have an awesome guest on, Jordan Goodman, who is also known as the Money Answers Man. Jordan has been in the journalism ministry, the money industry for many years. He actually started his own newspaper at one point. Spent 18 years with Money Magazine. He’s been on all the major television networks. Done tons of radio shows all talking about money and becoming financially wise. I'm super excited to have Jordan on the show, talk to him, and I'm sure he can teach my listeners something and probably myself as well.
Jordan, thank you so much for being on the show.
[0:02:25.3] JG: Great to be with you, Mark. I don’t know if I could really serve the listeners.
[0:02:28.1] MF: Nope. I’m sure you can. One thing I always like to start with is just get some background for my guests on where they came from, and I know you’re not technically in the real estate industry, but you do a lot of real estate stuff. How did you get started becoming an expert on money?
[0:02:43.8] JG: Goes all the way back to age 12, if you really want to go back. I used to live on Cape Cod [inaudible 0:02:48.7] in the summers and I started writing for the local newspaper, The Cape Cod Times at age 12 about baseball. Kind of got interested in journalism. Went all the way through there. Went to Amherst College, [inaudible 0:02:59.4] School of Economics, Columbia School of Journalism. I started my own financial newspaper, as you mentioned, and went to Money Magazine. So you learn a lot of those in the job, but I’ve just always been interested in helping people with all aspects of their personal finances. But I’ve got a lot of specific strategies in real state that I think are really going to help people, your listeners, doing it better.
I’ve got a lot of these resources at my website, moneyanswers.com and I’m glad to take emails from your listeners as well.
[0:03:27.1] MF: Very cool. Yeah, we’ll have show notes that will give links to your website, and I know you can give out a phone number. Then yeah, we can list your email too. Looking at today’s society, maybe we’ll start there. What are some of the biggest problems or issues you see with people and money?
[0:03:43.2] JG: One of the biggest problems is earning a decent yield on your money. If you keep your money in the bank, CBs, money market funds, savings accounts, they’re pretty much going to get zero. It’s just outrageous. In the last year or so, the fed reserve has raised rates three times. The fed funds rate that they control, which means the prime rate originally what the bank charged has gone up three times. What the banks are charging has gone up for credit cards, student loans, car loans, mortgages, all kinds of loans. Their charging has gone up, but what they’re paying on deposits has not gone up. Okay?
The bank’s profit margins have widened dramatically. Bank stocks have gone up because of that, but the poor saver depositor is like stuck up in the cold earning nothing basically, and I think it’s going to continue. I think you’ll see another three, if not more, interest rate increases by the fed reserve in 2018, and that is, again, going to raise where people pay on loans, but I do not think for the most part banks are going to pass that through depositors. That’s the problem, is having your safe money sitting there earning pretty much nothing.
Here is my solution for that. I’d do what I call secured real estate funds, which is a way of earning 8% off of very good strategy with real estate. You’d get monthly checks, if you like, electronically at the first month or if you don’t need the money now, reinvest it and have your money compounding at 8%. Basically what these guys are doing is making short term, like one year commercial real-estate loans or projects that improve the value of all kinds of real estate. It could be assisted living. It could be private buildings. It could be parking lots. It could be student housing. All kinds of different things. The maximum that they lend is 70% of the improved value of the property. So there is kind of a cushion there. The builder, developers got a lot of skill in the game, and people have been doing this for a long, long time very, very successful, and there’s a way of getting 8% at actually one of the buildings, which are developed or sold. They share some of the profits back from shareholders. They might get another one or two points in profit sharing on time for that or in a quarterly basis once the projects are sold.
There’s a website where people can find about it, Mark, which is securedrealestatefunds.com and there’s also a phone number, 888-444-2102. Minimum investment is $5,000. Minimum hold is one year. So they’re not going to have access to the money for a year, but after that you can get it whenever you like. There’s a solution. Instead of having your CD, one year CD at .01%. [inaudible 0:06:29.6] I’ve got 8%, and because of all these things I’ve just mentioned, it’s really quite secure.
[0:06:35.0] MF: Yeah. I mean, being in the real estate industry now, I don’t mean consider a CD or a money market in investment. I think after inflation, you’re losing money. It doesn’t even make sense. With these secured real estate funds, are they similar to a REIT? How are they set up?
[0:06:50.7] JG: Not really. REITS are publicly traded. So they go up and down in value, and there are mortgage REITS and there are equity REITS. But even the mortgage REITS trade with real estate. So if interest rates go up, as they happened recently, mortgage REITS are going to go down a lot more than they’re paying you in dividends. Secured real estate funds do not trade. They’re not designed to go up and down. Your principle is basically unchanged, but you’re getting 8% yields. There are mortgage REITS with yields of about 8% or 9%, but the value of them I think will fall pretty significantly if interest rates keep rising here. That’s one of the big differences in it.
One year minimum hold, but after that typically people will hold on to it for as long as 10 years. It’s similar, but different. There are not a lot of REITS that do what we talked about, this kind of short-term lending. They might do long-term mortgages, but not short-term kind of bridge financing to help a construction project completed.
[0:07:47.2] MF: Right. It does sound a little bit like some crowd funding companies that are in the real estate space now. Is it more similar to those?
[0:07:53.3] JG: Correct. Actually, specifically the crowd funding law, which is called the Jobs Act of 2012, authorize what are called regulation A+ funds, and that’s what these secured real estate funds are, Reg A+ funds they call them for sure. That allows the average individual to get into things, in this case $5,000, that in the past only like pension funds or somebody with $100 million would able to get into, something like that. Yes, this specifically authorized in effect of the crowd funding legislation. It was passed in 2012. It took the SEC till about 2016 to come up with the regulations to do it. These funds had come out since that time, so in the last two years or so. Yeah, it’s allowing the average person to participate in things which in the past just wouldn’t have been possible.
[0:08:42.2] MF: In my experience with real estate, I think so many people are missing out a lot. People on my side already know this who listen to me, but the rates of return you can get in real estate being the actual investor or just can be through the roof if you do it right. There’s also some risk. But then as well with some of these crowd funding sites and different investments, being a private investor not even doing the work, there’s just some really great returns as well that I think so many people miss out on.
[0:09:07.0] JG: Of passive. What you’re doing is active in far as flipping properties, which is great, but that’s not for everybody. Some people just want to invest in something and have other people do the work and have the expertise. These funds have a specific strategy, which is what they call collaborative lending. Meaning they’re almost like a partner to the builder or developer. They’re kind of working together to get the project done. As supposed to a bank, you don’t think of them as collaborative at all. You think of them as the opposition basically. They’re giving people a really, really hard time getting commercial mortgages, even long-term ones. Never mind the short-term construction ones. That’s why these builder developers are willing to go to these secured real estate funds, because it’s faster, it’s easier and they’re like a partner. Think of it that way.
As a result of that, the builder/developers are willing to give up a piece of their profits to the fund shareholders, which is kind of highly unusual. You’re never going to see that from a bank.
Mark, I’ll just give you an example of a project that I did recently. Would that be helpful?
[0:10:08.9] MF: Yes.
[0:10:10.8] JG: For example, there was a guy in Boulder, Colorado, a big college town, who had a big house he’d been renting out to two students for many, many years. He took a loan from a fund. It took him about a year, but he completely rejiggered the house to make it into four apartments instead of two; four bathrooms, four kitchens, four doors. Now a year later he’s got the same house with double the income that he had from before.
His cash flow doubled. The value of the house went up 50% to 70%. He was glad to pay the fund, maybe 10% for a year, and he couldn’t get a loan from a local bank. You see what I mean by collaborative lending? They were kind of his partner in making this thing happen and they also do what I call forced appreciation. Before that project ever happened, they knew in advance that if he doubled the number of units, exactly what happened is cash flow, what his values would be, the value that they were adding to the property, not Boulder real estate going up in general. You see?
That’s what I’d use and that’s why it’s a success. It’s really win-win-win all the way around and you’re participating in that in a passive way by being an investor in this thing. Again, if that helps anybody, their website is securedrealestatefunds.com or 888-444-2102.
[0:11:28.3] MF: I was thinking, one of the problems in the country right now, at least in my area and many other areas is the lack of new housing inventory. Are they using these funds for new construction projects as far as single family homes at all?
[0:11:42.2] JG: It’s about half renovation of existing properties and half new construction. Could be private buildings, it could be single family homes, it could offices, it could be medical buildings, assisted living. There’s all kinds of different things they do, and what these funds do is they’re widely diversified by type. All the different types I’ve just mentioned, and then wide and diversified by geography. It might be in 30 different states. Something like that. That’s another kind of a security feature of it, is that you’re wide and diversified by type and geography.
[0:12:13.8] MF: Right. That’s very interesting. I know the crowd funding size that I’ve looked at and I’ve had some of the on my podcast as well. It sounds like a pretty sound investment. Now, I guess I would ask, are there risks involved with those projects failing? What happens — it sounds like a pretty large fund, but what would happen then?
[0:12:31.7] JG: Not guaranteed. I do not use the word guaranteed. That’s an FDIC term. Yes, projects can go sideways. People behind these funds have done this for like 30 years and they know how to deal with things when they go sideways. One of the advantage of having a fund is you have many different projects in there. So if two of them go sideways, it’s not really going to affect the overall [inaudible 0:12:54.3] in any significant kind of way.
When you do a crowd funding when you’re doing a specific project, you got all your money in one basket there and something goes sideways, and that can be a problem. That’s one of the things I like about the diversification by, again, type, geography and many different projects. It means if one or two of them runs into trouble, it’s not really going to impact [inaudible 0:13:14.5] in any significance.
[0:13:15.9] MF: Right. That makes a lot of sense, because that is how most of the other sides operate, is kind of a single project, single user, and if they go down, they have things built in place to and lessen the risk, but there are still probably going to be some problems.
[0:13:30.5] JG: Real estate is not perfect. Things go wrong. Builder/developers have great intentions and they always follow through. I mean one of the things I know these real estate funds do, for example, is they give the money out in stages. They don’t like to just give them the money all upfront. Maybe like 10% stages. You have to get this amount of renovation down. We inspect it, and if it’s done correctly, then we’ll give you the next 10%, that kind of thing. They’ve got all kinds of built-in kind of safeguards so that people can’t run off with the money or they know exactly what’s happening all the time to make sure it’s going well.
[0:14:02.0] MF: No. That makes sense, and that is — Yeah, I think kind of a safer way of doing it than the typical one single project. Now, I know you’re doing some other cool stuff and have some other cooler ideas as far as real estate goes. One thing that I know I figured out, well sort of a little bit. The other day on YouTube, I keep seeing these advertising popping up for using a HELOC to pay off your mortgage. I’ve watched it. I kind of got the gist of it. Can you talk more about that and that concept?
[0:14:31.2] JG: This is the strategy of what’s called mortgage equity optimization, and if you do it right literally, you can pay of the 30 year mortgage in about 5 to 7 years depending on how the numbers work out. Now, this can be for your primary residence or it can be for investment properties as well that your listeners would have. So it can work either way.
Let me just give you a simple example of how this works. The traditional system is you take, say, a 30 year mortgage and you make the same payment for 30 years. All the interest is frontend loaded, right? The first 10 to 15 years, making very, very little progress of the principle, paying off a lot of interest. Then if you refinance to get a lower rate and a lower payment, you just start a new 30 year clock all over again, and basically throughout tens of thousands of dollars of interest, you’d pay another first mortgage. Meanwhile you’re keeping your money in a checking account earning zero. That’s the existing system that works so well for the banks. You them money for free, you pay them tens of interest upfront for many, many years. We agree that’s the current system, right?
[0:15:34.7] MF: Yes.
[0:15:35.4] JG: Okay. Now we’re going to reverse the tables an instead of making your money work for the bank, we’re going to make your money work for you. That’s mortgage equity optimization. By the way, I wrote a chapter in my book called Master Your Debt about this called mortgage free in 5 to 7 years.
So what you do is you open a home equity line of credit, what’s called a HELOC, which is a liquid line against your house. You can take money in, you can take it out, you can write checks on it. It’s completely liquid. Anytime, any direction, with no penalties involved. You’d take that out as a second on your house. Let’s just say your primary resolute for the moment or it could be your investment property too, and you kind of feed the first from the second and end up paying your principle down much, much faster on that HELOC. I’m going to give you an oversimplified example of how this might work, which might help.
Say you had a $300,000 house and you have a $200,000 first at 4%. You got a good rate. You’d go out and take your HELOC for maybe 50,000. You have plenty of equity, so you have a $50,000 HELOC, which is brand new. You haven’t used it yet. $200,000 first. You would write a check on the HELOC for a few thousand towards the first. So you just paid your principle down. Now, 250 instead of 200, and you now owe 50 on your HELOC, right?
You used the HELOC kind of like your checking account. You keep your income, which is normally sitting in your checking account doing nothing in the HELOC pushing down your principle every day. HELOC is based on what’s called average daily balance. How much do you owe today? You’re making progress against your principle every day. The best of all worlds, if you have all of your bills, the food bills, your electricity bills, every bill you have on one credit card. Hopefully you’ll get some free fly miles as well.
So every day during the month, you’re making progress in your principal except for one day, and you pay your bill and the HELOC balance goes up. Every other day you’re making progress to your principal, because they do average daily balance. As your principle goes down in an accelerating rate, you owe less principle and therefore you owe less interest. Literally, every month your payment is going down on your HELOC as you pay it off faster, which is kind of blows people away. That’s what I work.
Going back to our example, so over nine months, a year, however long. Let’s say it’s 9 months. You pay that $50,000 off by having the money in there. Now the 50,000 is free and clear. Then you do it again. You write another $50,000 check towards your first, which is at 150,000. That brings it down to 100,000. Over the next nine months, you pay the HELOC off. You do it twice more .Your first is now paid off. You paid off the HELOC in 5, 6, 7 years. You’re completely mortgage free. That’s kind of a vastly oversimplified way of explaining it. There’s a free website that you can actually model it in your own situation, which is truthinequity.com. You’d go on there and you’d fill in what’s called a personal profile. You put in your income, your expenses, your home value, your mortgage, all the different things. [inaudible 0:18:49.5] saying, “Okay. What you’re doing today is going to take you 28 years to pay off your mortgage. Based on the numbers you just gave us, it will be 5.6 years,” wherever it comes up to be. Then they show you step-by-step how to do it.
That’s a vastly oversimplified way of explaining how mortgage optimization can literally save you 25 years off your mortgage and tens of thousands of dollars of needless interest.
[0:19:14.3] MF: One question I have, when you’re doing these figures and figuring out this is going to be paid off in 5 to 7 years, are you assuming that like all your extra money is going into that mortgage or are you just assuming that it’s the normal payment you would have had otherwise?
[0:19:28.3] JG: All the money you’ve got, instead of sitting in your checking account, it’s sitting in your HELOC pushing out principle down every day. If it’s sitting in the checking accounts doing nothing for you, it’s helping the bank, which take the money and lends it back out. But if it’s sitting in the HELOC, it’s pushing down your balance every day.
Say you have that $50,000 HELOC and you’ve got that paid check for a thousand dollars. You’d normally keep it sitting in your checking account earning nothing. You put that thousand dollars in the HELOC, and now you have 49,000. You just paid the HELOC down by a thousand dollars. You interest on 49 instead of 50, which can be a little bit less.
[0:20:04.8] MF: Got you.
[0:20:05.5] JG: Income you’ve got coming in is going to be pushing that principle down in a continuum basis. There are three things, Mark, you need to make this strategy work. The first one, you got to have equity in your house. If you’re under water, there’s nothing to borrow against, so you can’t do it. Second thing, you’re going to have a decent credit score, maybe 6, 80 or higher marked up. The third thing, you’d got to have positive cash flow. More money coming in than going out during the month. The more positive cash flow you have, the faster the mortgage gets paid off.
I bet the vast majority of your listeners have those three things, and therefore they can use mortgage optimization that literally save themselves tens of thousands of dollars of interest they’re paying needlessly.
[0:20:45.8] MF: Right. I understand that. One thing, I think you’re kind of assuming they aren’t investing in anything else at that point then, right?
[0:20:53.2] JG: Let’s do this on an investment property. You do the same thing. You take your tenant’s rent and you put into the HELOC on the investment property. Your tenants are paying your investment property off much faster than would be otherwise if you kept the rent sitting on the checking account earning nothing, right?
[0:21:12.3] MF: Right.
[0:21:12.6] JG: If you used an investment property just as well as it can be on your primary residence.
[0:21:18.4] MF: Okay. Nope, that makes sense. One thing I would — The thing that — I don’t know if I say disagree with you on, but I understand the concept of the whole HELOC and everything, is that I personally would love to use that money, actually buying more properties or investing in something else instead of paying off my 4% mortgage. That’s my personal preference.
[0:21:41.1] JG: I’m just giving people options, and you’re also comparing a certainty with an uncertainty. If you use this technique, you’re certain when you’re going to pay your mortgage off. If you buy another property, hopefully it’s going to work out well and hopefully it will appreciate and do all kinds of wonderful things, but if it doesn’t, it doesn’t work that way. People say, “Oh! I’ll take the money and invest it in stock market which is doing great.” It is, until it isn’t. I don’t like to confuse what’s certain with what’s uncertain. This is a system that if you follow it exactly, you are certain as to when you’re going to pay your mortgage off. What happens with another property is uncertain. Hopefully good, but uncertain.
[0:22:21.0] MF: Okay. I have a question that you may not be able to answer, but I’m very curious about. Have you ever compared doing this strategy versus taking all your extra money and investing it in a secured real estate funds at 8%?
[0:22:34.1] JG: You could combine those two. If you have extra money and it’s earning 8% in a secured real estate fund, that might be a better way than paying off your mortgage faster at 4%. It gives you another option.
That’s a better way of doing it. What a lot of people do is they keep their extra money in the checking account earning zero. That’s really helps you. A lot of people probably before they even know the secured real estate funds existed by 8%.
One of the things that they do at this truth an equity to that job is they look at various options and kind of customize it based in your situation. In some cases it might make sense to pay the mortgage off more slowly if the money you would have put into that is being used to make more money for you. For some people, that’s not good. Some people just want to pay their mortgages all faster. Can you imagine a 30-year-old couple who have their primary mortgage paid off by 35 instead of 60, right? And then they can spend the next 25 years investing and being mortgage free.
Now, I’m not saying it’s for everybody, but it’s giving you an option that most people don’t even know existed. Believe me, banks do not want you to know about this. If you’d go to a banker and said, “I’d like to do mortgage equity optimization.” He will have no clue what you’re talking about. Frankly, he is not interested in finding out about it, because he wants you to pay that mortgage off as slowly as possible, because that’s where banks take all their money on that upfront interest.
[0:24:00.1] MF: Right. I’m not trying to give you a hard time. In fact I agree that the vast majority of people, if given the option, they say they would invest in something else, but they probably won’t. They probably spend it. I think I have some stats from an article I wrote that 80% of people’s net worth when they’re 60-years-old is in their house. It’s crazy. Then I see all these articles about how you should be renting instead of buying, but the facts really do say your house is your best investment, because it almost is a for saving plan for people.
[0:24:31.0] JG: Imagine what a difference it would have made if those people who are in those 60s had paid their mortgage off when they were in their 30s instead of paying all that interest through 30 years. They would have owned outright and the extra income that would have gone to the mortgage can be invested in stocks and mutual funds and real estate and other things. So they’d be far, far better off having their mortgage paid off sooner and investing the difference in other ways. By the time they get to retirement, they have a decent nest eggs. Lots and lots of people are getting through retirement with nothing close to a decent next egg or nothing and still having mortgages left over as well. It’s a tool I just wanted people to be aware off, and it may or may not be right for you, but it’s a tool most people don’t even know exist.
[0:25:12.8] MF: Nope, it make sense. One thing I asked you too before we started this podcast, we’re chatting for a little bit while my computer restarted and had some problems. But the tax laws do affect this.
[0:25:23.1] JG: Yes.
[0:25:24.0] MF: Can you explain that a little bit about how the new tax laws would affect HELOCs?
[0:25:28.6] JG: HELOC interest had always been tax deductible, where part of the tax law that passed at the end of 2017 meant that interest on home equity line of credit is no longer deductible. It’s going to make it a little bit more extensive to do this strategy and a little bit less attractive, but it was never about deductions anyway. What it’s about is paying your principle all faster.
What banks, they have you asking the wrong question. They have you asking, “What’s the rate and what’s the payment on a mortgage?” The real question you want to ask that they want to answer is, “How fast do I pay off my principle?” When you’re at a closing and they’re going to give you an amortization table, somewhere in the deep piles of paper that you’re signing. It’s going to show you month-by-month how slowly you’re paying off your principle and how much interest you’re paying. People don’t even look at it. They just want to get the keys to the house, but it’s right there in black and white you’re paying off your interest, your principle very, very, very slowly. Even though it’s not deductible, I’d still rather pay my mortgage off quicker and have my money working for me all the way instead of having it working for the bank.
[0:26:36.2] MF: Right. Then we also talked too that with the new rules, the standard deduction doubled. I think that estimate are almost 90% of people won’t even take interest deductions anymore because of that. it probably won’t affect most people anyway with the new tax laws.
[0:26:51.1] JG: Right. The standard deduction went from 12,000 to 24,000 for the average family. Meaning, they’re not going to get deductions or anything. Mortgage interests, charitable contributions, health expenses, student loan interests, no deductions at all. You’re correct. In that case, it’s not going to affect them anyway.
[0:27:07.1] MF: Very cool. It’s a very interesting strategy, and to be honest, when I first saw the advertisement on YouTube I’m like, “Oh! What is this scam?” Then I listened to it, I’m like, “Oh! There’s actually something to it.” So it makes sense.
[0:27:17.9] JG: Right. If you do it right. There have been some scammy people on this field. I’ll mention, there was a company called United First Financial, UFirst, that was selling this idea as a multilevel marketing scheme. Basically, it’s selling software, like $3,500. They say, “Here, you take this software and you figure it out.” People couldn’t figure that out, and that was a scam.
The people I’m talking about truth and equity have been doing this for a long, long, long time and they’re customized for your specific situation. It’s not as thought it’s cookie cutter, everything is the same everybody. You have to look at the numbers and see what’s best for your particular situation. If you do it right — This is being done around the world, Mark, in Australia, in Hong Kong, in Canada, other places. It’s just not as common here, because the banks resist. Banks love the current situation, like earning all these interest for many, many years.
[0:28:06.0] MF: Right. No, that’s great. Awesome. Jordan, there’s one more thing I want to talk to you about, the hero’s program. I had never heard of this. I kind of had it to hud. You can buy a house for 50% through hud if you’re an EMT, firefighter, but it’s called the good neighbor next door. Can you talk about the hero program and what that is?
[0:28:26.3] JG: This is a program called heroes come first, and a hero is defined as a doctor, a dentist, current military, veterans, retired military, police, fire, first responders, EMTs, clergy, all kinds of different people who are basically in the kind of serving professions. It’s nice to say thank you for your service, but this is actually giving them money back in their pockets in a way that they’re really going to be benefiting about it.
What they do is they get significant discounts on mortgages, fewer points, lower interest rates, all kinds of discounts on mortgage, mortgage rates and all the fees involved in the closing costs, and they’d get a rebate of a portion of the realtor’s commission when they’re buying a home or when they’re selling a home, either way. These can add up to three, four, $5,000 depending on the situation and save people a ton of money if they’re heroes.
Now, people are heroes, they don’t realize they’re heroes or know how to be recognized for it. To find out more about this particular program, go to heroescomefirst.com, that’s the website, and the phone number is 800-272-5626. Part of a nationwide program. Kind of started after 9/11. When there’s a fire or a bomb or something, all of us are running out of the building. These are the people who are running into the building. It’s nice to give them a better break, and there you go, the heroes come first program.
[0:29:59.6] MF:How does that work exactly with the real estate agents? Are the real estate agents giving up part of their commission? How does that work?
[0:30:07.1] JG: Going into the program. The realty companies have agreed that if somebody qualifies as a hero, they’re willing to give up maybe half a percent — If they’re getting 3%, maybe they’ll give up a half of the — If it’s three, they will give up half of the percent. If you see what I mean. So they end up getting 2.5%, something like that. Yeah, everybody is kind of onboard and recognizing the service that these heroes do, and it’s nice to give them an actual monetary benefit as well as just saying thanks.
[0:30:41.7] MF: Okay. Very cool. Coming on another perspective of this. If real estate agents want to join this program, is there anything especial they have to do to sign up?
[0:30:50.9] JG: I would do that. Go to heroescomefirst.com. It’s probably not going to be individual agent. It’s probably going to be their brokerage. It’s going to sign up as a company and offered to anybody who buys them. From their point of view, they’re going to attract heroes to do their transactions, buying or selling to them as supposed to somebody else who isn’t. It’s a way of getting listings as well.
[0:31:12.0] MF:Right. Our audience has a lot of real estate agents as well as investors. So that’s why I’m asking.
[0:31:18.5] JG: Yeah. I mean, if you want to differentiate yourself from other realtors and if you’re willing to give back a little bit of your commission, maybe they list with you instead of other agents. Yeah, you can give them a little bit of a break.
[0:31:28.9] MF: Awesome. Jordan, I think those are all the questions I had, all I want to talk about. Any major aha, like you have to do these things that we missed, whether it’s real estate or just money in general that you want to share with people?
[0:31:42.4] JG: Let me just mention one other area in real estate that people may not be aware of. A lot of people’s real estate payments are wrong and they don’t know it’s wrong. They’ve been overpaying for years. This is on adjust rate mortgages, this is escrow accounts and this is on private mortgage insurance premiums.
On adjust rate mortgage based on the movement of interest rates. These mortgages are so from one services to another to another and to another, and in many, many cases they make mistakes and you don’t even know you’ve been overpaying. If you get this audited and the website to do that is verifymymortgage.com. If you get audited, they’ll say you’ve overpaid by $8,000 to get a refund.” And then they’ll adjust your payment. They’d get your original note, see what your history of payments has been, what it should have been, and in like 50% of the cases they find people are overpaying in their mortgage. That’s the mortgage part.
The one is escrows. Many banks are over-withholding on escrow for property taxes and insurance. They assume proper taxes will be higher than they are. They assume insurance premiums are going to be higher than they are. So they are over-escrowing. Again, you can get a rebate and adjust your escrow back to a more realistic level. A website for that is verifymyescrow.com.
The final one is the plague of real estate, people, private mortgage insurance, PMI. This is what insures the lenders if you have less than 20% equity in the house. I hate paying premiums when I’m not being insured. I’m insuring the lender.
People don’t realize that they’re overpaying on PMI very frequently. If the value of their home goes over 20% equity, they’re supposed to get rid of the PMI, and the PMI companies are never going to tell you about that. Say for example you did an addition or did an improvement on the house that would add to its value. Say the values in your neighborhood are going up a lot as they are in many places. You could very well be over 20% equity without having done a 20% down payment and being paying far more — It can be hundreds of dollars a month in PMI that you don’t really need to be. A website for that is verifymypmi.com. The phone number for all those three verifies, it’s a verification company, is 800-888-6781 and it burns me up a lot that people are paying too much on their mortgages, escrows and PMIs and here’s a place that can verify and get you a refund, get your payments correct.
[0:34:15.8] MF:Awesome. That’s something I’ve never checked myself. I just kind of assume the bank does it right. I was an REO agent, listed a lot of foreclosures for banks and going through that side of it, you realize that the banks are so gigantic and huge half of the time. They have no idea what’s going on with their loans.
[0:34:35.0] JG: You’re paying the price for it. You’re paying more PMI than you should be. You’re being over-escrowed and your mortgage payment is wrong. You’re right, people just say, “The bank, it’s a bank. What could go wrong?” Lots can go wrong. Yes, I agree with you.
It’s an independent place. Take a look at it. If everything is right, they’ll tell you that, but at least you know if you’ve been overpaying or not, and they then — If they have been overcharging you, they’d give you a detailed letter saying, “Here is what should have paid. Here is what you did pay. Here’s the amount you over paid, here is what your new payment should be,” and banks would normally accept that, and I just saved your listeners thousands of dollars in overpayments in their mortgage.
[0:35:13.5] MF: Right. I may have to check that myself.
[0:35:15.6] JG: Right.
[0:35:16.0] MF: Awesome. Jordan, great job on the show today. I really enjoyed it. I learned a lot myself. If people want to reach you directly, I know you’ve got your own podcast. What’s the best way for them to learn more about you?
[0:35:27.5] JG: My show is called the Money Answers Show. It’s on weekly on what’s called the Voice of America Business Network. The way to reach me is moneyanswers.com, and I’ve got loads of resources and videos and links of all types there. My books, I talked about Master Your Debt, for example. They can even write me emails, and I’d be glad to get emails from your listeners at moneyanswers.com.
[0:35:47.4] MF: Awesome. All right. Anything else you want to leave us with before we head out of here?
[0:35:51.5] JG: We gave them 8% on their money with a secured funds. We helped them pay their mortgages off in five years instead of 30 years with mortgage optimization. We helped heroes get big breaks on their mortgages and buying and selling homes, and we verified their real estate payments. I don’t want to overwhelm them with too much stuff.
[0:36:12.1] MF: I think that was awesome. No, thank you again for being on. I really appreciate it. Yeah, I am serious. I learned quite a bit from you about various programs I wasn’t aware of, and thank you very much for being on the show.
[0:36:24.2] JG: Thanks so much, Mark. I appreciate it.
[0:36:25.5] MF: All right. We’ll have to keep in touch, and have a great rest of your week.
[0:36:29.0] JG: Thank you.