Banking

Discussion in 'Hardscaping' started by tthomass, Jan 12, 2009.

  1. DVS Hardscaper

    DVS Hardscaper LawnSite Fanatic
    Posts: 6,404

    Todd, Sounds like you have your mind made up :)

    You're right, this is the construction biz. It's the 2nd riskiest industry in the world.

    Years ago I refied my home with all good intents. It didn't quite work out as planned. Things in life can take place that can be out of your control.

    It will be a long long time when we see values that peaked 2 years ago. Thats neither here nor there, today :) Home values are plummeting, thanks to foreclosed and short sale homes. There are so many foreclosed and short saled homes that when an appraiser pulls comps, all he/she has to work with is comps for homes that sold for 1/2 their value. (LOL - I have a buddy thats a real estate appraiser, about a month ago he and I had a hr long conversation on this, where he had to break the reality to me)

    People always say a home is an investment. Well, no it's not a freakin investment, it's a HOME! We all WILL need a roof over our heads each and every day until we die. It's a HOME! Now, owning other property where you do not hang your hat at night.....that's an investment, thats something one can count on for when times get tight, or to fund retirement and the kids college tuitions.

    I recently refinanced to take advantage of the current low rates. The settlement guy is also the owner of the settlement company with 2 offices. When signing papers he commented on the fact that I didn't take cash out. I responded "been there done that, I took cash out to pay some business bills, never again". Being the owner of a successful settlement company, he responded "I hear you, I have done that too, and I'll never do it again either, if I need money for the business - I'm gonna get rid of employees before I re-fi my home again".

    There are guys that are very frugal with their money. But like you said, the construction industry is up and down, up and down. Because of that fact, when it comes to loans, I am overly conservative.

    I have a lawn / landscape maintenance contractor buddy that is as successful as one can imagine. A very smart, young Guy. His house is on a 15 yr mortgage, with like 5 or 6 years remaining. He recently bought a commercial property for his business, put down a HUGE deposit....IN CASH.....without taking a penny from his home's equity. He said his friends and family were all amazed that he had saved up for the down payment, because he never told anyone.

    This year, I think many of us have learned the value of the term "cash flow". All you need is a rich sugar mama to support you!!!
     
    Last edited: Jan 13, 2009
  2. tthomass

    tthomass LawnSite Gold Member
    from N. VA
    Posts: 3,497

    Let me know when you find my an attractive, smart, young and successful sugar mama for me!!! Girlfriends are almost like underbidding a job haha.

    If you look at the additional $ being taken out as just that and my two trucks paid.......my business has no debt. It has overhead, no debt. Now, yes I am technically still taking out more $ but again the additional payment is now optional vs fixed.

    I'm not talking about a large sum of money or doubling my principle but configuring things to my advantage if need be.

    Sent you a PM.
     
  3. Sunscaper

    Sunscaper LawnSite Senior Member
    Posts: 306

    It seems like it can be a good idea. Bernanke is going to print his way out of the mess. I think its a good idea as long as you put some of the cash into an inflation proof asset, i.e. commodities to hedge your newly incurred debt. This way you can borrow with cheap money now and pay off or service the debt in a few years with your hedge instead of hard work. Best of luck.
     
  4. IndyChad

    IndyChad LawnSite Member
    from Indiana
    Posts: 216


    This is very true. Right out of college I worked for a mortgage company/bank for about 4 years and within a year of doing debt consolidation refi's about 90% of the individuals that we did loans for were in the exact same situation they were in when they came to us. And they still had the higher mortgage from the refi. If a payment is an optional payment, then more than likely you will not choose the option to pay it as time goes on. There is no problem getting a lower interest rate, but do check your origination points and additional closing cost because if you do the math a lot of times it is not worth it especially if you are pulling money out for other debts. Good luck to you!
     
  5. neighborguy

    neighborguy LawnSite Member
    Posts: 186

    If you choose to do the refi:

    I would ask the bank is they use simple or scheduled interest, if they reamortize with every payment (if they do it will greatly benefit you),

    if they offer a biweekly payment (if yes, do they actually apply each payment or hold it until they get the full payment), is biweekly free,

    and on the settlement disclosure page, look between lines 800 and 825 for something called YSP or additional brokers compensation ( it will be paid outside of closing; they will tell you that it is money paid to the broker don't worry about it, but it is really an extra compensation that you choose to pay the broker for putting you into a higher rate than you actually qualified for)

    Couple things I have learned along the way.

    Good luck
     
  6. AztlanLC

    AztlanLC LawnSite Bronze Member
    Posts: 1,035

    I just don't see why you guys think this is a bad idea the guy will refinance and his payments will be lower that what he currently pays.
    Is not like he is going to pay more monthly for this is much the opposite that is being responsible.
     

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