mortgage
Let’s look at costly misconception held by millions of Americans:
1. Most people believe that home equity is a prudent investment, yet you have proved that it does adequately pass the liquidity, safety, and rate of return test of prudent investing.
2. Most people believe making extra principal payments on their mortgage saves them money.
3. Most believe mortgage interest is an expense that should be eliminating as soon as possible.
4. Most believe home equity has a rate of return and enhances their net worth.
1. Most people believe that home equity is a prudent investment, yet you have proved that it does adequately pass the liquidity, safety, and rate of return test of prudent investing.
2. Most people believe making extra principal payments on their mortgage saves them money.
3. Most believe mortgage interest is an expense that should be eliminating as soon as possible.
4. Most believe home equity has a rate of return and enhances their net worth.
Most people who want to develop home equity have the misconception that the best method is to accelerate the payoff of their home by making extra principal payments on their mortgage. Some home-owners are lured into thinking that biweekly payment plans are the answer. Others rely on fifteen-year than thirty-year mortgage amortizations. In actuality, such methods are not the wisest ways to accomplish a “free and clear” home.
Through another strategy, you can accumulate sufficient cash in a conservative, tax-deferred mortgage acceleration plan to cover the liability of the mortgage on your home just as soon as or sooner than you can with the traditionally accepted methods. Additionally, you will have the following advantages:
1. You will maintain flexibility, liquidity, and safety of principal by allowing home equity to grow in a separate side fund where it is accessible in case of emergency, temporary disability, or unemployment.
2. You will maximize Tax-deductible interest by keeping the loan balance as high as possible until you have accumulated sufficient cash to cover your mortgage. In a 33.3 percent tax bracket, you can actually accumulate enough to pay off a $150,000 thirty-year mortgage in thirteen and a half years by using the same cash outlay required by a fifteen-year mortgage. This is possible partly because of up to $12,000 to $20,000 (depending on your tax bracket) of Uncle Sam’s money instead of your own.
3. You will maintain control and portability of your home equity to allow an increase in its rate of return. Most homeowners relocate an average of every seven years. As explained, your home may likely sell much more easily and for a higher price with a high mortgage balance than with a low mortgage balance. Regardless of real estate market conditions, your equity should always be kept highly liquid.
Through another strategy, you can accumulate sufficient cash in a conservative, tax-deferred mortgage acceleration plan to cover the liability of the mortgage on your home just as soon as or sooner than you can with the traditionally accepted methods. Additionally, you will have the following advantages:
1. You will maintain flexibility, liquidity, and safety of principal by allowing home equity to grow in a separate side fund where it is accessible in case of emergency, temporary disability, or unemployment.
2. You will maximize Tax-deductible interest by keeping the loan balance as high as possible until you have accumulated sufficient cash to cover your mortgage. In a 33.3 percent tax bracket, you can actually accumulate enough to pay off a $150,000 thirty-year mortgage in thirteen and a half years by using the same cash outlay required by a fifteen-year mortgage. This is possible partly because of up to $12,000 to $20,000 (depending on your tax bracket) of Uncle Sam’s money instead of your own.
3. You will maintain control and portability of your home equity to allow an increase in its rate of return. Most homeowners relocate an average of every seven years. As explained, your home may likely sell much more easily and for a higher price with a high mortgage balance than with a low mortgage balance. Regardless of real estate market conditions, your equity should always be kept highly liquid.
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