Home Equity Planning

You might have heard of Home Equity Transfer, Equity Harvesting or Home Equity Planning. There are many people who highly recommend this as the best way to jump start your retirement program. This concept was developed over 20 years ago and there are many books which address strategies for Home Equity Planning. The question is does this concept make sense for you based upon your personal goals and financial situation. If done properly with the right plan, mortgages and investments it is hard to beat home equity planning to achieve your financial goals.

Some of the advantages of separating or harvesting your equity from your home include:
1. Increase financial liquidity – the ability to access your money when you want it
2. Increase the safety of your retirement or investment money
3. Establish a private retirement planning strategy that can be superior to qualified plans
4. Earn a rate of return by employing idle assets that are not optimized (such as home equity)
5. Realize tax savings through higher tax deductions
6. Eliminate non-preferred debt
7. Create opportunities for other investments
8. Create greater property sales options
9. Create an emergency fund

While there are many reasons to implement this strategy, it has to be done correctly or you can get yourself in trouble. During 2000-2008 real estate boom many individuals were sold on the benefits of equity planning but did not have the proper guidance. They used negative amortizing mortgages or pay option mortgages and were not disciplined enough to take the additional savings over an interest only loan or fully amortized loan and invest it in a safe vehicle such as a whole life or index universal life policy. So what we are saying is that for many of our clients equity planning is a good decision and makes sound financial sense but it is has to be done properly. Fitch Financial Partners understands the way to properly structure home equity planning with the right types of mortgages and investments so that you can use this strategy to your advantage.