Getting the Most from Your Mortgage

A growing number of real estate financing professionals are saying that how and when you purchase your home, whether or not you refinance, and why, should be scrutinized in the same way that your overall financial picture is.

“Right now, there’s a lot of excitement and buzz in the industry about home equity management,'” explains Michael Ginsberg, managing partner of The Mortgage Practice in Walnut Creek.

Ginsberg is one of about 20 mortgage professionals in the Bay Area to receive the Certified Mortgage Planning Specialist (CMPS) designation, a five-part program that focuses a mortgage broker’s attention on helping home buyers make the wisest financial decisions when it comes to dealing with purchasing, and dealing with the equity in, their homes.

Ginsberg says that the situation of many people illustrates why there needs to be a major shift in the way home financing is approached. “Most people haven’t planned for retirement, or they have considerable consumer debt,” he explains. In the meantime, their home values have gone up, up, and up, creating “lots of appreciation.”

But the CMPS designation doesn’t merely shout, “Refinance now!” In fact, it admonishes both homeowners and mortgage brokers to take a step back and look at the larger picture. “It’s a shift away from transactional thinking. Instead, it’s looking at mortgages to see how it fits into someone’s overall financial plan.”

Granted by the CMPS Institute in Ann Arbor, Michigan, the designation provides instruction in five basic areas: financial market and interest rate analysis; cash flow analysis; debt analysis; real estate equity management; and real estate investment analysis.

According to a recent CMPS press release, “A mortgage professional who dedicates the time and effort to learn about these financial concepts is much more qualified, committed and equipped to serve the complex needs of today’s home owner and buyer,” says Gibran Nicholas, Chairman of the CMPS Institute.

With an overall focus on homeowners’ larger financial goals and preserving and building wealth, Ginsberg says homeowners aren’t always going to be encouraged to acquire real estate. “Some people think that they’re going to become the next Donald Trump,” he says, referring to those who want to strike it rich with real estate investing. “But buying a rental property is just like buying a shoe store. All the things that go with a business are there, and people have to think about that.”

Even a standard refinancing comes under CMPS scrutiny in a different way. “Someone has to stand up to a client, at times, and say, ‘It isn’t a good idea to buy a new car with your home’s equity.'”

However, don’t label the CMPS approach as conservative. The outlook doesn’t necessarily assume that you want to pay off your mortgage entirely, that you are ever able to, or that doing so is always a good thing.

“It’s a way of looking at it and saying, ‘Maybe most of the rules about mortgages, from the pre-Depression era, no longer exist.’ All the rules of why people should pay off their house or even have a mortgage are different.”

If that sounds like a lot of planning – it is. Ginsberg estimates he spends as much as two hours with each client, reviewing how a possible purchase or refinance will impact their financial standing. As part of the process, Ginsberg works with a client’s financial planner, CPA, and estate planning attorney. “We’re working as a team,” he explains.