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Money Hacks with Jordan Goodman
Jordan Goodman is known as “America’s Money Answers Man” and a nationally-recognized expert on personal finance.
For 18 years, Jordan was on the editorial staff of Money magazine, where he served as Wall Street correspondent. He is the author / co-author of 13 best-selling books on personal finance including Master Your Debt Fast Profits in Hard Times, Everyone’s Money Book, Master Your Money Type, Barron’s Dictionary of Finance and Investment Terms and Barron’s Finance and Investment Handbook.
Jordan is also a speaker and seminar leader on personal finance topics for business executives, students, associations, investment clubs, employees and others.
- Who Jordan Goodman is
- Traditional system vs mortgage equity optimization
- How money equity optimization works
- 3 things you need to make it work:
- - equity on your house
- - decent credit score
- - positive cashflow
- Earning passive income from real estate without having to do anything
- Secured real estate income strategies
- Heroes come first program
- Verifying your mortgage
- "With mortgage optimization, instead of having your money work for the bank your money is actually working for you."
- "Always take free money if it's offered to you."
RESOURCES AND LINKS FROM THIS SHOW:
- Money Answers - Jordan Goodman
- Dictionary of Finance and Investment Terms by John Downes and Jordan Goodman
- Master Your Debt by Jordan E. Goodman and Bill Westrom
- Truth In Equity
- Secured Real Estate Funds
- Heroes Come First
- Verify My Mortgage
- Loantech (Verify My PMI)
- Resources from Jordan Goodman for Brain Pick-A-Pro listeners!
Larry: Welcome to the Brain-Pick-A-Pro show live from Lake Wylie, South Carolina. I’m Larry Goins. Thank you guys so much for watching and listening. We really really appreciate. I am really excited to have on a great great quest today. This guy just blows me away with everything he’s done. He is the Money Answers man. He’s been doing this like forty years I guess.
Jordan: Yes, correct.
Larry: He got his own show. I mean, he teaches people practical common sense stuff, really good information, just great content, great information. The guy has written 13 books. Come on, man. You got me by like three times. What’s up with that? Three or four times, or five times.
Jordan: I can keep up with you, Larry.
Larry: So please give a warm welcome, Jordan Goodman. What’s going on, man? How are you doing?
Jordan: Great to be with you, Larry. Yes, well we both are in the same business of trying to help people do well in real estate so I’m going to try to give some really practical strategies they might not have heard about before, specific resources. They can take advantage of these things.
Larry: Awesome. Awesome. Start out and tell our viewers and listeners a little bit about yourself.
Jordan: Sure. So I’ve been America’s Money Answers Man for about 40 years. I was at Money Magazine for 18 years. Wall Street correspondent there. I just have done 13 books. I did one called The Dictionary of Finance and Investment Terms, defining all the terms of finance and investment. I did one called Master your Debt, where we are talking about some strategies, having to do with mortgages there. I won’t go through all 13, but I have lots of books. My website, MoneyAnswers.com. I’ve got a YouTube channel. I do the Money Answers show which is going for about 11 years now. I’m going to have you on as a guest as well there.
Larry: Right. Right.
Jordan: I am on-call on radio shows and TV shows, give speeches, webinars, everything I can to help people improve their personal finances in all kinds of ways.
Larry: Awesome, man. That is really good. That is really good. So, let’s just jump right in, you know. I know you got a lot of different strategies, and you know, you’re going to give people right here and right now some specific resources, phone numbers, websites, and things like that that they can put into action right away.
Larry: So you’re going to provide some really, really good contents. So guys, I encourage you out there. Please take a lot of notes. Grab a pen. Grab something to write on and get ready to take a lot of notes because, you know, man, Jordan’s got some really cool stuff. In his books as well. Make sure you bookmark his website and stuff. He’ll give out some links here in a few minutes. Man, why don’t you just jump right in. I know you got like a whole laundry list of things you prepared.
Jordan: Let’s start with the first one which is a strategy people may not have heard about which is called mortgage equity optimization, and literally, it allows you to pay off a mortgage many many years faster you never thought possible on your existing level of income. Typically, you can pay off a 30 year mortgage in about 5-7 years on your existing level of income and this works both for your primary residence and also for investment property where your tenants pay you mortgage off much much faster than possible.
Jordan: So let me just briefly explain the traditional system and how this is kind of a different traditional system. The traditional system, you take out a 30 year mortgage and you keep your income from your paycheck, wherever you’re getting your income from in your checking account, sitting there earning zero. This works really well for the bank. Okay? Because they’re charging you interest upfront, the first 10 to 15 years, it’s pretty much all interest. The amortization is very, very slow.
Jordan: Then even better for the bank, when you refinance the mortgage, you start a new 30 year clock all over again. So, even though your interest rate and payment maybe a little bit less, you just threw away tens of thousands of dollars in interest you paid upfront for that mortgage. So that’s the traditional system which works so well for the banks. So don’t expect to hear about optimization from the banks because they don’t want you to know this, alright? So, with mortgage optimization, instead of having your money work for the bank, you money is actually working for you. So, here’s briefly how it works. You open up a home equity line of credit, HELOC, which is called the HELOC, which is a liquid line against your house. You take money and you could put it out with no restrictions. You can write checks on it and so on. That’s a second on your mortgage. You’re going to keep your first. Say you have a good rate, say you have a 4% rate or something like that. You’re going to keep that but you’re going to do is what I call the blended strategy, combining the HELOC with that first to pay it off much, much quicker. So you open the HELOC, write a check from the HELOC towards your first, pay your first out a little bit and then you keep your income in the HELOC all the time. Your money is pushing down the principal. HELOC is based on what’s called average daily balance. How much do you owe today. So, the money that you have that’s normally sitting in the checking account doing nothing is in the HELOC pushing your balance down everyday. So the amount of interest you owe is less and less since your principle is going down so much faster. Then you kind of pay the HELOC off and then you do it again and you keep paying your first down.
Let me just give you simple example of how this works, Larry, I will spell it out that way. So, say you have a house worth, whatever, 300,000. I’ll give you an example.
Jordan: So you have 200,000 dollar first on it, at 4%. It’s some kind of a good rate. You got to go open a HELOC for say 50,000. So you just opened it. You haven’t used it yet. You will then write a check on the HELOC of 50,000 and do it towards the first. So instead of owing 200 on the first, you now owe 150. During the next year or so, you keep your income going into that HELOC pushing your balance down every day and after, whatever, roughly a year or so, that 50,000 is paid off. You then do it again. You do another 50,000 dollar check towards the HELOC, towards the first, and then instead of being 150,000, you owe 100,000. Pay off the HELOC, do it twice more, after four years, your first is paid off. In the fifth year, you paid off the HELOC, you are now mortgage free. That makes sense?
Larry: So what you’re doing is you’re just really using the advantage of compound interest, at average daily interest, and the lower rate on the HELOC or a low rate on the HELOC and the flexibility of a HELOC, to be able to lower your balance. You’re converting a 30-year fixed rate mortgage or 20 year whatever, fixed rate mortgage, a portion of that into a HELOC so the average daily balance is lower so your interest is much, much less because you put your paycheck into that.
Jordan: Yes, it works for investment properties too. So, say you have rental unit of some kind and you’re taking the money, the rental income from your tenants and putting that into the HELOC and you’ll be free and clear, whatever, in five years instead of thirty years on an investment property. So it works both ways. The advantage to you is you have far, far less interest. You also have liquidity. When you have a first mortgage, you have no liquidity, you can’t write a check on your mortgage.
Larry: Right. Right.
Jordan: This gives you liquidity and the equity in your house. By the way, you can put other debts in there, student loans, credit cards, car loans, all kinds of other things. You run through that HELOC and then once your mortgage is paid off completely, you still keep the HELOC so you still have that liquidity if you need it for other things, including buying investment properties of various types.
Jordan: So there’s three things you need to make this work, Larry. The first thing you need is equity in your house. If you’re under water in your house, there’s nothing to borrow against.
Larry: Right, right, right.
Jordan: You need a decent credit score, 680 or higher, to qualify for the HELOC and the third thing you need is positive cash flow. During the month, more money coming and then going out because that positive cash flow is what’s pushing that principal down on a regular basis. The more positive cash flow you have, the faster it gets paid off. It’s just about of numbers. Now, there’s a free place to actually model it in your own situation which is truthinequity.com. truthinequity.com. You go on there. You set up what’s called the personal profile. You put your income, you put in your expenses. You put in your home value. You put in your mortgage. You put in all the numbers. Then it goes, okay, based on what you’re doing today, it’s going to take you 28 and a half years to pay your mortgage, whatever it may be, and based on the numbers you just gave us, it will be 5.6 years. It will tell you precisely how quickly you can pay your mortgage off and then they show you step by step how to actually implement the strategy. So I have just saved your listeners 25 years off their mortgage and tens of thousands of dollars in interest in a way the bank will never tell you about.
Larry: Man, that is huge. That’s really good stuff.
Jordan: Including before and afters.
Larry: I’m on the website right now. I’m on the website right now. Just rolling the website, looking around. Here’s one link right here, you mentioned, personal profile, you go in and it gives step by step instructions and you just fill out the form. Boom, wow.
Jordan: Boom. It will give you exactly what your payoff would be, so the more positive cash flow you have, the faster it will get paid off there. You are now in control of how quickly you pay off your mortgage as oppose to the traditional system. You got this huge rock that you got to pay off for over 30 years with all the interest upfront. So now you’re in control. One of the difference in people. Imagine, a couple that’s 35. Their mortgage is paid off at 40 instead of 65.
Jordan: What a difference that’s going to make in their life, right?
Larry: Plus then it freeze up all the equity that now instead of having a 50,000 dollar HELOC, you know, you could have a 200,000 or 250,000 HELOC, and that for investments as well and leverage.
Jordan: Correct. Correct. So it’s a great thing. It’s just most people don’t know or ever heard of all these. Mortgage equity optimization strategy, truthinequity.com. That’s strategy number one.
Larry: That’s awesome, man. I love it. I love it. What’s the next strategy you’re going to share with us?
Jordan: Next strategy is to earn passive income from real estate without having to do anything, without having to buy property, deal with tenants. I know what you do all the time, which is great, but for some people, they don’t want to do that all the time or they want to do less of it, so there are funds that are so called regulation A+ funds or commonly called crowdfunding funds, do it for you.
Jordan: You get an 8% annual yield in monthly checks and it’s completely passive from your point of view. My family wants this called the secured real estate income strategies or SREIS as they called it for short. And the website for that is securedrealestatefunds.com. They got a phone number too. 888-444-2102, just for full disclosure. I’m on the board of this thing. I know these people extremely well. It’s got a great track record so it’s something I believe in very strongly. What they’re doing is lending money short term, a year to 18 months, something like that, to a highly diversified portfolio of commercial real estate all over the country. Not residential, commercial. Things like apartment buildings, medical offices, student housing, senior housing, parking lots, just all kinds of different commercial properties. The maximum loan to value is 70%. So they’re not lending with full value, probably they lend 70%. So the borrower-developer always has lots of skin in the game, 30% or more. These are projects that are vetted very very carefully, and so you diversified geographically over the country and diversified by the different types as we said. The people running this fund, real estate associations, has been doing this for like 30 years. The price of the shares does not change. It stays at 10 dollars a share and asset value. So you don’t have to worry about going up and down, you know, the stock market has been crazy. It all went down all over the place. This to me is an alternative to bonds or cash. Bonds, you got 3% with a lot of volatility and I think rates are going to go up so you have potential capital losses there. Cash, your principal doesn’t change, but you don’t earn anything on it these days, you know, well underl 1%. So, as long as you can tie your money up for one year, 5,000 was the minimum for this, but there is no commissions or anything like that. The full amount you invest to get some there, you now have an 8% yield and actually it’s a little bit more than 8%. 8% is what’s called the preferred return. Shares from the interest. But they actually have a profit sharing on top of it. So in addition to that, when the building that they’re financing sells, the borrower shares 30% of the profit with the fund and the fund gives 80% of the profit to the shareholders.
So, for example in 2017, the actual return of the fund was 8.7. So far this year, it’s been about 8.4 because there was profit sharing. Distributions happen like on a quarterly basis, when the building is sold. So you get the income and then with a little extra on top from the profit sharing.
Larry: That’s really sweet, man. I like that. I am on the website now. A lot of really good information. I love it. In fact, one of the leadership team I interviewed on this show a while back. Mark Ross from Good Steward.
Jordan: Correct. Good. Good Steward is kind of financial administrator of the whole thing. So, when you call that number I gave you, the 888-444-2102, it goes to Good Steward. They typically start with what’s called the Folio account. Folio is a third party administrator. Set it up at Folio. You can reinvest it. You can do it on the IRA. In this very volatile world, there is something where the principal doesn’t really change and you’re getting an 8% plus yields. I think it’s a good thing. A portion of your real estate portfolio. This is the passive portion of it.
Larry: Right. Right.
Jordan: Anyway, that’s idea number two.
Larry: That’s good. That’s good. I love it. I love it. So that’s securedrealestatefunds.com, right?
Jordan: Right. Correct.
Larry: That’s good. That’s good. So what else you got for us?
Jordan: Next one is giving tremendous values to heroes in helping in their real estate transactions. This is a program called heroes come first. So a hero is defined as military, either current military or veterans, doctors or anybody in the medical fields, dentists, nurses, anybody in the medical fields, educators, teachers of any kind, clergy, EMTs, police, fire, all those kind of people.
Jordan: These are people who give their lives for us. When the fire is happening, we’re running away. They’re running in. You know, when 911 happens, they’re the one running into it. They’re literally putting their lives on the line for us. You know, you say thank you for your service when you’re in the airport passing military person but I’m not going to give them a lot of money. That’s even better, alright? So this is what this heroes come first program does. The website is heroescomefirst.com. They give them a rebate of one quarter of the real estates commission when they’re buying a home or when they’re selling a home. Right there, that could be thousands of dollars. The real estate agent is giving it back. He’d rather get the sale and, you know, he’s willing to give up a quarter of his commission to help a hero basically, that’s the first thing. There are grants of as much as 10,000 dollars which you’re going to payback for down payments on the first home for a hero. There are discounts on closing costs on various types, escrow, appraisals, title, all the things that go into that, you get big discounts of the closing costs, and they lower interest rate on the mortgage as well. So literally, it could be thousands of dollars that the hero gets for being hero basically.
Jordan: The website for that heroescomefirst.com. They got a phone number 888-437-6114 and so you would go there. If you’re considered a hero or you know a hero and say, who is the real estate agent where I’m located that’s part of this program. They’ll refer you to somebody and who are the title companies and all the closing agents involved. Anyway, that can help a lot of people save a lot of money if they are heroes when doing a real estate transaction.
Larry: You know, that’s really, really good and it’s very important. We’re involved in several organizations that help veterans and I think that’s very, very important.
Jordan: It is. They really need it. They have a hard time in many cases and they’ve literally put their lives on the line, so it’s a way of giving back to them.
Larry: You’re so right about that.
Jordan: I’m happy to help other folks.
Larry: You’re so right about that, right about that. Man, this is good stuff. This is really, really good stuff. If you’re just now joining us, you know, make sure you grab a pen and a paper and jot some of the stuff down. This is awesome stuff. We’re talking with Jordan Goodman and he is America’s Money Answers man, right? So, what else you got for us there, Jordan?
Jordan: Okay. So, there’s a program in auditing if you have adjustable rate mortgage. A lot of people don’t realize that their mortgage payment is incorrect. Now, if it’s adjustable, if it’s going up and down of some kind of a index, it could be a national mortgage rate, it could be the primary, it could be LIBOR, there’s a bunch of different indexes and there’s a spread over that index; as it goes up and down, you think the bank is doing it right. 40% to 50% of the cases, they’re doing it wrong actually. Often, you know, mortgage has shifted from one mortgage servicer to another, to another, to another, and they often mess it up in the meantime. So there’s a place called verifymymortgage.com and they’re got a phone number as well, 800-888-6781. What they do is they see your original mortgage document. They see the payments you’ve made and they audit it to say what you should have paid. Again, 40% to 50% of the cases they’ll find you’ve overpaid, typically by thousands and thousands of dollars. One guy have like, he overpaid for 40,000 dollars for the last 15 years, or something like that. It might not be that big, but people do not. It’s a problem people don’t realize they have, never mind solving it. So the guy who runs this verifymymortgage named David Ginsburg. He’s been doing this for years. He knows all the indexes and where they should have been and whether they’re up and down. In the end, he’ll give you a detailed letter saying here’s what you did pay and here’s what you should have paid and here is the, whatever, 10,000 dollars you’ve overpaid and you send that to the bank and they usually have to say, yes you’re right. You know, we audited it. You get the rebate and then your payment is adjusted correctly. So again, it’s a problem a lot of people don’t really know they have, Larry. But a lot of people are paying far, far more than they should be on their adjustable rate mortgage.
Larry: You know, Jordan, that’s so, so important because a lot of people get an adjustable rate mortgage and then they just forget about it, right? They just forget about it and they just, you know, oh the bank sent me a letter. I guess my payment went up, right? The same thing with PMI, they don’t realize after a certain length of time, you can eliminate the PMI altogether. They don’t realize that.
Jordan: David Ginsburg does the same thing for PMI actually. It’s called verifymyPMI.com and what they do is if you have 20% or more equity in the house, you shouldn’t have to pay private mortgage insurance anymore. Now the private mortgage insurance company has no interest in telling you you are over 20%.
Jordan: None. They just like keeping getting those premiums. I hate private mortgage insurance because you’re insuring a lending. You’re not insuring yourself. You’re insuring of somebody else and you’re paying hundreds of dollars a month in premiums of something you don’t even get any benefit from basically.
Jordan: So there’s several ways that your PMI can be stopped. Say homes have appreciated in your neighborhood a lot, which has happened to other people. Say you did an addition or some kind of improvement. That could increase your equity. Say you pay your mortgage, you made extra mortgage payments, say you use the mortgage equity optimization model we talked about in the beginning and you pay your mortgage down a lot. There’s a lot of way that you can get over that 20% hump and the PMI insurance company is never going to look into it or tell you about it. So you have to kind of challenge then. This David Ginsburg who does the verifymymortgage has the same thing, verifymyPMI.com and again. It can save you hundreds of dollars a month in private mortgage insurance premium you don’t have to be paying. So you’re actually right.
Larry: So what you can do is use your mortgage equity optimization model where you pay down your mortgage and then every year or so, then you have it verified.
Jordan: And you get rid of your PMI.
Larry: … through verifymymortgage and verifymypmi to make sure that they know exactly what the balance is, correct?
Jordan: Once you’re over 20%, they’ve got to stop it.
Jordan: So anyway, a lot of people are paying PMI that shouldn’t be, but they don’t know how to do it. By the way, the same is true with having to do with escrows. A lot of people pay too much on their escrow. An escrow is where their bank is holding aside money for property insurance and property taxes based on their assumption. In many cases, I assume, too much. They assume property taxes and property insurance insurance premiums are higher than they should be.
Jordan: They’re not right. Again, they’re holding this money. They’re earning interest on it. You’re earning nothing on it. The same guy, this David Ginsburg. He does these three things called verifymyescrow.com and it does the same thing. It looks about the property insurance and taxes if it should be, making it sure if you’re overwithheld, gets the escrow reduced, you get a big refund. So he asked three ways to help you verifymyescrow, PMI, and mortgage. Again these are problems people don’t really know they have, never mind know how to solve it.
Larry: Wow. Problems they don’t even know they had.
Jordan: I like to solve problems people don’t really know they have.
Larry: You know, it’s really like free money or found money, wouldn’t you say?
Jordan: One of my basic principles of personal values, Larry, is always take free money if it’s offered to you. I would hope you’d agree with that one.
Larry: Right, right, right. Listen. Everybody likes free, guys. Everybody likes free, right? Free is for me.
Jordan: Absolutely. Now I’ve actually created a special landing page for your followers specifically which is go.moneyanswers.com/brain since you’re in the Brain-Pick-A-Pro. On there, they’ve got some links for free stuff. I have a monthly newsletter. Money Answers newsletter. It’s just all kinds of resources. It’s just a small sample, but I want to do some things specifically related to real estate that can help your folks in all kinds of ways. They probably didn’t know they could pay their mortgage off in five years instead of 30 years, and verify their mortgage and get 8% passive income and all these things. So, hopefully this has been helpful to you listeners a little bit.
Larry: That’s good. It’s really really good information. Guys, go over there and grab it. I’m on the website right now. It looks really cool. I like it. There’s a lot of good information there you can get. go.moneyanswers.com/brain. Go G-O dot money answers dot com forward slash brain. B-R-A-I-N for Brain-Pick-A-Pro. So, go.moneyanswers.com/brain. Special website he set up just for Brain-Pick-A-Pro listeners. In fact it says, welcome, Brain-Pick-A-Pro listeners.
Larry: Right? You’re here because you listened to my chat with Larry Goins on Brain-Pick-A-Pro. Yes, good. That’s awesome, man. I really, really appreciate you sharing all these great information with us with our listeners. It’s really, really good stuff. A lot of people, you know, I’ve noticed, Jordan, they’ll get caught up and I got to get a real estate deal. I got to make a 10,000 check. I got to quit my job. But, a lot of people don’t think about the small things, that a little bit of difference every single month, do they?
Jordan: Correct. Correct. I mean, just thinking how much you’re wasting on mortgage interest if you’re paying the traditional system for 30 years. That just burns me up actually. The banks have every interest in not telling you that there’s an alternative. They think you’re doing a great job by giving them your money for free and paying interest for 30 years. I mean, just a bit amount of education and that’s what I’ve been doing for a long time, is helping people. In my books and radio shows and doing podcasts like this. I just love to wake people up to things that they don’t even know they got, and by solving problems that they don’t know they have.
Larry: That is awesome. That is awesome. So guys, the best way to connect with Jordan is go to http://go.moneyanswers.com/brain. Special landing page there that will give you a lot of information and you can connect with Jordon there, right Jordan?
Jordan: I’m glad to take emails from your folks as well. I do that all the time.
Jordan: Random things like follow up with people. I really love to help. I am just doing this a long, long time. I love to help your people, Larry.
Larry: Awesome. Awesome. Now, is there a separate email address?
Jordan: They could just go through that moneyanswers thing and there’s an ask Jordon thing at moneyanswers.com.
Larry: Okay cool.
Jordan: People give me their life stories and I love to help.
Larry: That’s awesome. That’s awesome. Well, man, thank you so much for being on today. I really appreciate it. This has been some great content. Great information for everybody. Really, everyday, you know, information that anybody can use regardless of their current situation.
Jordan: Terrific. Well, thanks so much, Larry. I appreciate being on Brain-Pick-A-Pro.
Larry: Awesome. Thanks a lot for coming on. I appreciate it. Thanks a lot everybody for watching and listening. Please be sure and leave us some positive feedback. If you like the show, leave us some feedback. We really would appreciate whether it’s on iTunes or leave us a comment on Facebook or whatever it is you want to do and go check out Jordan’s website at that special link. We’ll put it in the show notes as well. Thanks a lot everybody. Thanks Jordan. I appreciate it.
Jordan: Alright. Thanks, Larry.
Larry: Take care.