Back to all stories

Mortgage financial advisors pushing risky loans

Original source

In the fall of the year 2005 and when the real estate market was going crazy and all kinds of real estate investors were giving speeches and masquerading as advisors, I attended a local seminar about real estate investing.

I already had my rural land property/investment business model developed and most of my current advisors in place. A mortgage broker was speaking about loans for real estate.

These so called mortgage financial advisors were recommending people take interest only loans to fund their real estate purchases because the rates were low and it cash flows easily. There are many problems with this dumb advice.

Here are some:

  • Debt at some point has to be paid back. Anybody who has done any investing and used debt with real estate, stocks, or a business knows this. Delaying indefinitely paying off a debt is foolish.
  • Even if an interest only loan for any type of investment cash flows today, it might not tomorrow, next month, or next year. The investment might quit paying. For example:
  • The tenant lost his/her job. The property flip did not work as the foundation crack was not discovered during the euphoria when the property was bought. Funds (from more debt) were needed to fix the crack when an engineer who looked at the property to buy it discovered it.
ISSUES
Deceptive Practices
Incorrect Advice

Related Horror Stories

My REIT Nightmare

Read full story

What's the dumbest piece of advice a financial adviser has given you? Put your money in this “safe” REIT…. lost half of it AND the fund was “frozen” when the banks did their nasty back in 2008; had to wait for 5 years to get even that back.

Read more
ISSUES
Incorrect Advice

Deceived for Commission

Read full story

When I was new and wanted to buy mutual funds, they sold me ULIP in the name of Mutual Funds, which they were not dealing even, but for getting some commision, they found me a good prey.

Read more
ISSUES
Conflicts of Interest
Incorrect Advice

Most advisors are just monkeys

Read full story

Most are just monkeys 🐒 on a string following a long set of guidelines. What you need is someone who understands math and questions every single guideline. Some of the guidelines don't past the test and end up costing their clients money every year.

This is a very small percentage that can actually do this. In fact my financial advisor is one of the majority monkeys. Occasionally I need to remind him to manage my account my way or he will start managing it like the rest of his clients. But he is a very good and smart person with a good heart.

I wouldn't trust a good percentage of them, find one that gives of the right vibe.

Read more
ISSUES
Incorrect Advice
Read more stories

Share Your Story

Have you had a negative experience with a human financial advisor or other human “financial expert”? Share your story to help others avoid similar issues. Together, we can shed light on the importance of reliable, unbiased financial advice - its been a big motivator for us to build PortfolioPilot.

Shield icon representing anonymity protection
Don't worry, stories are anonymous!
Thank you for adding your story - we'll review for compliance reasons and post it in the next few days!
Oops! Something went wrong while submitting the form.