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Mortgage Payoff: Why Your Mortgage is Your Friend and How it Can Help You

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In a time of change, it is critical to rethink why we believe what we believe.  Mortgages have always been a target of negative financial thoughts and something most traditional financial planners would suggest be paid of sooner than faster. After all, you don’t “want all the interest” to be going to the banks! Is it possible to have a mortgage become a wealth-building tool, rather than just the biggest piece of debt we will ever get into?  Right?  Well, one of the topics of great debate, “paying off my mortgage is a mistake” has revealed certain truths through this recession.

Five years ago, we began a movement called “home equity management“, encouraging homeowners and real estate investors to rethink about leaving home equity dormant within a property that ultimately wastes the value of this asset over time.  In fact, I helped illustrate this with a “pitcher and goblet” analogy during my workshops held during Money Smart Week with the Federal Reserve Bank of Chicago.

Illustrating the mistakes of early mortgage payoff with a pitcher and goblet analogy

The video below is one of the oldest videos we put together with old equipment and outdated software. It’s also one of our most popular videos.  Dave Muti and I chopped this before I created the Money Smart Radio blog and financial talk radio show!  Time flies!! Dave is an attorney, mortgage expert and author of the book Mortgages: What You Need to Know.  The principles are so powerful, that a real estate agent walked up to me at the gym a couple of weeks ago and told me his experience during this recession.

He remembered what I taught in these workshops, but unfortunately, never did anything about it.  He admitted that at the time, he was proud of his work, having two paid off homes, another two properties cash flowing $1,000 above what he was charging in rent and selling many homes from his own real estate agency.  The ideas I had were just to against his existing train of thought, after all, on paper he was a millionaire.

He says, “Had I followed what you told me, I would still BE a millionaire!”

Now, if a real estate agent who owns his own real estate agency, whose daily job is knowing the ins and outs of homeownership and real estate investing can get it wrong…what about the common person who isn’t?

Please tell me your thoughts and stay tuned for a future post on Five Critical Mistakes Homeowners and Real Estate Investors Cannot Make in the New Economy.

After watching this video, you may want to consider working with a mortgage professional, versus a transactional-minded loan officer who credits building his business on the lowest rates, cheaper fees and quicker closing time frames.  I’ve personally worked with hundred of loan officers and as I share with them the importance of teaching their clients how critical it is to manage their mortgage and obtaining the proper mortgage structure to creating wealth…it flies over their heads.  Many that I have found just don’t want to take the time to educate their clients and would rather close the deal sooner so they can get paid faster.  What a shame that is!

Money Smart Coaching:  Would you like to learn how to take advantage of the missed opportunities with your mortgage and real estate plans?  Would you like to know how to use your mortgage to create wealth vs. just simply payoff debt?  When I share with people the most expensive mortgage they can have is a 15 year mortgage they are shocked at first, but after hearing “the rest of the story”…they are ready to embrace and implement new knowledge set before them.  If that is you, please give our office a call @ 708.686.2000 x1 or email us – [email protected] to set up a FREE 30-minute financial discussion with a Money Smart Coach.

Currently there is "1 comment" on this Article:

  1. Ty Washburn says:

    I can feel the pain here personally. I was adding extra payments to my mortgage then lost my job. Those payments did not carry over into the months I could not pay and eventually I lost my home. I wish I had that money back instead of sending it to the bank.

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