One Author Explains How to Go From Real Estate to Riches

David Bach, author of a new book titled The Automatic Millionaire Homeowner, recently visited The Early Show on CBS. He made some important claims, statement worth nothing for anyone looking to invest and prosper.

According to Bach, real estate is the single best route to getting rich in this country. While more Americans are catching on to that trend, many don’t realize there is a better mortgage out there for them - or that they could be saving a lot of money on their current mortgage.

The author told the audience on Wednesday about what he calls the “automatic millionaire mortgage” approach.

“If you have got a 30-year mortgage, I don’t want you to pay your mortgage for 30 years. I’ve got an approach that will get you out of debt in less than 23 years,” he told co-anchor Rene Syler. “Go back to your bank today and you say the following words. ‘I want a biweekly mortgage plan.’

“You take your mortgage payment. Let’s say it’s $1,000 a month, as a simple example. Instead of paying it once a month, you pay half, $500 every two weeks. When you pay your mortgage this way, you make one extra payment a year and take a 30-year mortgage and shave it down to 23 years, saving seven years on your mortgage.”

Banks do charge between $5 and $10 a month for calculating the biweekly formula, but Bach says if you want to avoid those fees, you can make one extra payment a year instead; or add 10 percent toward your principal each month.

He then talked about a home as a forced savings.

“Most Americans stay in a home at least seven years,” he said. “When you put money into that principal payment, you are just building up your savings account. So when you sell your home, that equity goes with you to your next house and makes it easier to buy your second home.”

Look at your Florida home loan

Bach suggests that all homeowners take time to examine the type of mortgage they are holding.

“Many Americans have mortgages right now and they don’t know what is in them,” he said. “We have got hundreds of billions of dollars in adjustable rate mortgages. Pull your statement out. Find out ‘When is my mortgage coming due? What’s the rate going to be? What will it adjust to?’ A lot of people, millions, quite frankly, have done interest-only adjustable rate mortgages. When these rates come due in 2007 and 2008, many Americans will see their mortgage payments go up by 50 percent or more.”

With that information, Bach recommends that people “call their mortgage adviser and look at what’s going on in the mortgage because most people, the most important decision they ever made was to buy their home but they don’t really know what their mortgage is right now.”

Options for refinancing your Florida home loan

Some possibilities to consider, when it comes to refinancing, says Bach, are to “Lock the rate longer. Refinance and lock your rate right now for seven years or 10 years or even 30 years. We’re still at very, very low rates. Second thing is, know your credit. Because your credit score is going to determine what your rate is when you go to refinance.”

If a homeowner’s credit rating has slipped, there could be bad news from the mortgage broker.

“If you go to refinance with a lower credit, you’ll have a hard time getting a better rate,” he said. “Pull those mortgage rates and credit scores and say, ‘When does my rate adjust and if it adjusted today, what would it cost?’ Sit down and have a conversation and say, ‘Are we in good shape? Can we really afford this?’ ”

Consider all Florida home loan advice

No matter where you turn, you’ll find advice on whether to buy, sell or hold. You’ll also read various views on investing and refinancing. The key is to keep an open mind, take note of the sources and make an educated decision regarding your Florida home loan.