For many years, the general thinking was anyone could get a loan at any time, for a reasonable rate. In 2008 and for the greater part of 2009, the general thinking was shattered when the economy tumbled and the credit markets dried up. The great majority of people which either wanted or needed a loan could not get one.
Even those with outstanding credit records found it extremely difficult. Banks were just not lending money.
At the same time as the ability to borrow money was reduced, the Real Estate market was experiencing an upheaval of sorts and property values were extremely low and significant bargains were to be had. But where could you go to get the money? The banks were not loaning and using equity values of existing properties as collateral became an issue as property values were decreasing and equity was disappearing.
There is another way to finance Real Estate Purchases, or any other purchase for that manner, in a way that will allow you to not be dependent on the status of the economy or the ability of the banking industry to lend money. It allows you to be in control. It allows you to either use it as is or leverage it in a manner which will facilitate the ability to get loans in tight credit markets. Walt Disney used this vehicle to help finance the construction of Disneyland.
The financial vehicle is whole life insurance. Most people know life insurance as a way for your loved ones to be taken care of upon the passing of the policyholder. Whole life insurance also has a living benefit- the cash value. The cash value grows over time in a tax deferred manner. The cash value is not correlated to the market and once credited to the policy does not disappear. The cash value can be accessed at any time by the policy holder for any reason- in fact a reason need not be provided. If accessed properly the dollars are available free of taxation. In many states, the cash value is protected from creditors*. The policy can be pledged as collateral. If the policy includes a waiver of premium rider** and should the policy owner become disabled , the policy will pay for itself while the owner is disabled. Additionally, over the long term, dividends*** and paid-up additions can continue paying the premiums.
Most people do not take the time to understand how whole life insurance works and therefore never understand its potential. Just like many people never take the time to understand how the Real Estate market works and thus never participate in its great income potential.
I encourage you to take the time to learn about how Whole Life Insurance works and see how you can use it to help finance your Real Estate transactions.
Ever Gonzalez
egonzalez@firstfinancialgroup.com
717-495-4890
*Neither Guardian or its subsidiaries, agents, or employees provide tax or legal advice. You should consult your tax or legal advisor regarding your individual situation.
**Riders may incur an additional cost.
*** Dividends are not guaranteed. They are declared by the company’s board of directors.
Evaristo Gonzalez, Registered Representative, Park Avenue Securities LLC (PAS). Securities products and services are offered through PAS. Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, New York. PAS is an indirect wholly owned subsidiary of Guardian. First Financial Group is not an affiliate or subsidiary of PAS or Guardian.
PAS is a member of FINRA, SIPC.
Neither Guardian, nor its subsidiaries, agents or employees provide tax or legal advice. You should consult your tax or legal advisor regarding your individual situation.
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