Can One Loan Do It All?

Can one loan do it all? This is a question I have asked myself recently, being in the mortgage business and studying finance over the last 15 years of my life I have finally realized what life is all about.In short life is about debt. I’m not trying to make life sound uninviting but let’s face it you either live it or you don’t. Money you either have it or you don’t. So why are so many people failing miserably? Due to our instant gratification type of society.We live most of our adult lives trying to maintain a job or career and keep up with the bills, and the “Jones’”. Many people are caught up with the new car craze or credit card obligations. I must confess being a mortgage banker by day I get to see the worst of the worst, and also the best of the best when it comes to peoples finances.So again since we are talking about loans for a minute why is it that so many people want more than they can afford; 500, 600, even 700 thousand dollar homes. I live in California and it’s not cheap. Some new alternatives to lending have arrived for instance a mortgage product designed with the benefits of 3 -4 individual mortgage products.Before I go any further I must make an important note. I am not encouraging you to take on anymore debt; I simply want you to know the options you have when you go to purchase or refinance your next or current home.Lenders love to sell sub prime loans (bad credit loans) they come with a great commission. I know of mortgage lenders who have sold a $600K home to a cashier at McDonald’s. That is an abuse of power; we all have the power to put anyone into a foreclosure within 6 months as a mortgage lender if all we do is think about our own pocket book.So for years now I have taken a different path. I will do sub-prime loans but not for a 1st time home buyer. Education is #1 in my book. So here you go, why I ask if 1 loan can do it all. If you purchased or refinanced your home which by the way in CA. happens every 2-5 years on the average; you would be a statistic, incurring more debt into your personal lives via credit cards, car and personal loans and more bills.Now you come and talk to your friendly mortgage lender and get a debt consolidation loan to “wrap up” all of your debt but did you really take care of it? No. You just sheltered it under the house and freed up your other sources of capital. There is nothing wrong with this concept; you get to deduct the mortgage interest as usual. You just have to feel the pain for the next 30, 40 or even 50 years.So can one loan do it all? In short yes but only if you understand that you cannot refinance and consolidate your debt(s), then go out and rack up of your other debt all over again. You need to manage your debt, budget your income and expenses and learn to use credit wisely.A mortgage, auto loan, credit card or any other type of financial tool is just that a tool. Use them for the proper application and you will have financial mastery, use them any other way and you will be doomed for sure.

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