Author: Ed Wacaster
Source: ezinearticles.com
Before you begin reading this article, please answer the question in its title. As you go on in this article you will learn some investment strategies as they relate to real estate and your mortgage. We as Americans still have some archaic mindsets on how to deal with a mortgage properly. We still believe that we need to pay off our mortgage as soon as possible so the bank can’t take it away from us, or foreclose on it. Given today’s economy, a lot of people wish they had paid off their mortgage when they had the chance. But let me show you a different way to look at the money involved in paying off the mortgage and how you might better use that large amount of cash.
Let’s take a hypothetical situation and use a $250,000 home, and put nothing down on a 30 year fixed mortgage at 5.0%. In rural California this is easy to do and quite real. It’s called a USDA loan and it’s available throughout the United States depending on the population in your town. The payment on that mortgage will be $1342.05 Principal and Interest only, not including the home owners insurance, real estate taxes and mortgage insurance. Remember this is a hypothecial situation as I’m only talking strategy here. If you were to take out a 15 year mortgage on this same home the payment would be $1976.98. A difference of $634.93 each month.
Now let’s take that $634.93 and give it to your Financial Planner each month and watch it grow over a period of years. In fact, if you have discipline to get that money to the Financial Planner each month at 7%, and it is there, you can pay that home off in 13 years and nine months. But! There’s More!
I can hear you asking now, “but how can there be more Ed?” Well let me tell you how there can be more, and here it is. If you were get sick, or lose your job, get layed off or fired, you have that hunk of money available to you to keep you going financially. You can still make your mortgage payment, car payment, credit cards payments, keep your kids in private school or college and on and on the list can go.
Conversely, if we go ahead and take that 15 year mortgage payment and pay the mortgage down as quickly as we can, we ain’t gonna have that chunk of change when life comes at us. Now we get to lose our home, our car, our credit rating and the kids will wonder what they did wrong.
Furthermore, you need six professionals in your life in order to create wealth and hang onto it forever. You need the Financial Planner of course. But add to that list an Estate Planner or Attorney, a CPA or tax professional, a Life Insurance Agent, a Real Estate Agent and a Mortgage Professional. If you have these six professionals working for you, you can get any question answered with a phone call and move your wealth in the direction that you want it to go. They will help you come up with a financial plan that makes sense and walk you through the process and chart that progress for you, keeping you on track.
Now, is that a drastic change in your way of thinking? Or is it just a slight adjustment? Either way, you can change your financial future with this stratgey and not have to come up with more money out of your pocket to do it.
Wishing you the best!
Ed Wacaster, CMPS, has been in the Mortgage Industry for 6 years, and works for Maidu Financial in Lincoln California. He enjoys helping his clients get their finances in order and on their way to creating true wealth using the Mortgage Planning Strategies he teaches them. He also instructs them on the need to have more than one source of income, which the Financial Planner and Life Insurance Agent can provide in the right setting, and given the proper circumstances.
Ed conducts public seminars to teach the public what he teaches to his clients privately. To be included in his e-mail blasts, send an e-mail to ewacaster@maidufinancial.com. Ed sends out a weekly Newsletter on Monday as he chimes in on what is happening with mortgage interest rates, the economy, how Washington affects our wallet and more. You can also send him an e-mail to ask questions about the articles submitted to this website using the same address.
