Home Depreciation

If you (or your client) owed little to nothing on your home, would you be that concerned about home depreciation? I say; no.

Little Progress Towards Debt Reduction:

• Negative equity is a predictive statistic for future home foreclosures. At some point in the process of paying on a severely underwater mortgage, the homeowner may come to believe the better option is to default and walk away. While economists have been somewhat surprised by the low rate of these so-called “strategic defaults” so far, when they occur they impact mortgage investors, the government (if the mortgage is guaranteed) and home prices (by adding new supply to the market).


• For many mid- to lower-income people, their home has been an important if not the largest source of retirement savings. With home prices down by 25% since the start of the financial crisis in some markets, this affects not only people whose home equity has been wiped out but those who, even if they may still have positive equity in their homes, have a lot less than three years ago.


• Some economists argue that negative equity decreases labor mobility at a time of seriously high unemployment. America has long been known as a land of both opportunity and mobility. If owning a home with negative equity constrains some people from looking for employment in other regions or states, the impact will be a slower drop in unemployment as new jobs are created.

Not Just a Loan, but a Solution to the Loan Itself:

These down-cycles would likely have little to no negative impact on your family if your home were close to being paid for. So what’s stopped you? (what's stopped your client?)

The fact is, your home is likely the largest investment you’ll ever need to finance, and the mortgage you used to buy it; is front loaded with interest cost hindering your ability to pay down rapidly. Do you realize the amount of interest you pay with a mortgage almost equals your original loan amount, and 25% of the overall interest due is paid by you the borrower, by month number 60. Not a good deal.

CMG Mortgage is the creator of the only 30 year simple-interest Home Loan in America, called the Home Ownership Accelerator.

Simple-interest means Principal is paid for first, and finance charges are calculated on your newly reduced loan amount each month. Furthermore, we’ve integrated a secured bank account which comes with your loan automatically, enabling you to remain liquid while your deposited cash lowers what you owe even more.

What's not spent in interest costs, are left in the account as home equity. The more home equity one has, the less one owes. Owe less, get charged less; it's that simple!

Some of the brightest economists in the nation agree the best place to put your money today, is in your home loan. The Home Ownership Accelerator makes this option very efficient and comfortable!

I welcome your comments

Dave Herbst