Rosh Hashanah, the Jewish New Year has many stark contrasts to the start of the American New Year. One common similarity between the two however, might be in the area of “New Year’s Resolutions” where individuals look to improve certain matters of consequence that have otherwise eluded them in the previous year. For those of us that take the necessary time to search for areas of improvement, the effects can be extremely rewarding.

When it comes to a financial “introspection,” I find it very disheartening to continually see that very few people make a conscious effort to review and reassess their monetary circumstances regularly. For homeowners or aspiring homeowners fiscal considerations should be reexamined consistently – but certainly as life-events change.

I was recently contacted by a woman who wanted advice on “some kind of a line of credit” for funds required for an upcoming simcha that her family was making. There was a firm deadline as her deposit was already past-due, and the actual event was less than three weeks away. Her request was primarily asking if I had connections at a specific bank to expedite a loan request she wanted to undertake. Fortunately, I took the time to ask specific questions so that I could get a better idea of their complete financial picture, so that I could truly offer my assistance appropriately. As usual, there were even more pressing monetary matters to consider in this instance, irrespective of the time constraints. Undoubtedly, the monies were urgently needed before their event, but based on the information that I was given a line-of-credit was the least viable and feasible option for them.

One of the questions that I always ask when someone inquiries about a “line of credit” is the purpose of the funds and the timeline for its repayment. For some people, a line of credit is needed for short-term opportunities or circumstances, where the principal of the loan will be repaid in a short period of time without-question. In those cases, the line of credit is certainly practicable, and sometimes, but not always ideal. In this particular situation, cash was needed immediately and indefinitely, with no strategy for its repayment. Upon further discussion, she also indicated that their credit score was a concern as it was negatively impacted by the excessive credit balances that they started to carry.

I was having this conversation at summers-end amidst a myriad of other loan applications well underway. As you might be aware, the end of summer is typically an extremely busy time for new home buyers who are looking to get into their house before the school year – while juggling the calendar of the Three Weeks, the Nine Days, and pre-holiday travel plans. It’s an immensely hectic time period to say the least. I really was not looking for a super time-sensitive, delicate, new loan application, with a lot of critical moving parts. However, I could not in good-conscious support the line of credit pursuit, when I know it’s not the proper solution in this case.

As I suspected, the credit balances and payments were disproportionate – and clearly indicative of a snowball effect of excessive monthly carrying costs. I dropped everything and ran numbers to see what I could offer to help improve their situation. It was time consuming, and it was laborious, but I truly could not think of a more substantial endeavor. If my recommendation was accomplished, I would be able to refinance their existing first mortgage, and cash-out the necessary proceeds to pay off about $50,000 in credit card debts. The appraisal and approval was a success – and the result yielded them over $1,200 a month of savings, while wiping away all of their credit card debts. Once that was completed, they were able to use one of their low interest rate debt-free cards to pay for their upcoming family event, while reaping the benefit of the lucrative reward-points on that card. (Note: As always, the specifics of the circumstances have been vastly changed to preserve client-privacy, but the illustration has been preserved)

It’s not always that mortgage guidance can be so blatantly lucrative and beneficial. However, it’s extremely rewarding when because of a little diligence and determination, that the impact can be so meaningful. In that regard, this is an ideal time of year to do a little more self-examination in all aspects of our lives to see how some small adjustments can improve our fiscal, physical, mental, emotional, and of course,  spiritual objectives that can benefit our entire year ahead. Good luck to us all!

Shout out to The Eisenberg family.

By Shmuel Shayowitz

 Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience including licenses and certifications as certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected].\