Margin Loans

My name is Tyler Vernon, President of Biltmore Capital Advisors.  What I wanted to do in thisshort video today was talk a little bit about margin loans, what they are and some interestinguses and how you might want to think about them.  Margin loans are loans instead of againsta house or other collateral you're using your investable assets, so things like stock, bonds,mutual funds or cash. Margin loans are typically tied to a variable loan structure.  We're fairly confident therates are going to stay low for quite some time, but if you wanted to lock-in any typeof long-term rate, margin loans certainly wouldn't be the way to go. Biltmore Capital as an independent firm has been able to negotiate some the lowest ratesin the country. 

Clients have come to us from all over the world to take advantage of someof these rates and what we found is that they've really thought out in the box with takingadvantage of these record low interest rates.  Obviously some are just refinancing currentmargin loans or refinancing other debt, but others are going out they're buying stockmarket investments if they do think that the market will continue to move up.  Some of ourclients have borrowed at rates . 77 percent and they lend it out on the back end at 7,8, 9 percent.  Other people have used this margin loan to flip homes.  One of the realbenefits of the margin loan is there's no closing costs.  They can immediately pull moneyand pay it back, so some people that are bullish on the real estate market have gone out andbought rental properties and they're using that income to aggressively pay down the loan. Others might be retiring over the next couple years and they know that they're going tobe moving to another area of the country.  Why continue to pay a mortgage rate that'sup at 4. 5, 5, 6 percent if they can refinance that to a much lower rate of 1 percent andsave tens of thousands of dollars a year. There certainly are risks to think about when you're contemplating using a margin loan. Obviously if the value of the collateral goes down or you stop making some payments, thebanks has the ability to sell your underlying stock or other collateral, so you really wantto make sure you sit down with your financial advisor and understand the risks that areassociated with it and have risk mitigation strategies in place that if that event doescome you have a plan sought out. I'm not here to encourage you today to take on more debt or use a margin loan.  It's notreally until you sit down with your financial advisor and you understand everything that'sgoing on your financial life can you really start figuring out - hey we do this, we cando that, we can save a lot of money here by restructuring some the debt.  I hope you foundthis video useful at any time feel free to call any of us here at Biltmore Capital Advisorswe'll be happy to discuss if a margin program might be right for you.