Out of this the American Mantra was born: Always own your home outright. Never carry a mortgage. The reasoning was simple: If the economy fell to pieces, at least you still had your home and the bank couldn’t take it away from you. Fortunately, since the Great Depression, laws have been introduced that make it illegal for banks call your loan due unless you default on your loan. Additionally, the Federal Reserve is now quick to infuse money into the system if there is a run on the banks, as we saw in 1987 and Y2K. In addition, the FDIC was created to insure banks. Still, it’s no wonder the dread of losing their home became instilled in the hearts and minds of the American people, and they quickly grew to fear their mortgage. And because of this, for nearly 75 years most people have overlooked the opportunities their mortgage provides to build financial security.

Why You Shouldn’t Hate Your Mortgage
Many people hate their mortgage because they know that over the life of a 30-year loan, they will spend more in interest than the house cost them in the first place. To save money, it becomes very tempting to make a bigger down payment or extra principal payments. But saving money is not the same as making money. Or put another way, paying off debt is not the same as accumulating assets. By tackling the mortgage payoff first and the savings goal second, many fail to consider the important role a mortgage plays in our savings effort. Every dollar we give the bank is a dollar we do not invest. While paying off the mortgage saves us interest, it denies us the opportunity to use that money to earn interest, which compounds over time.

For additional resources about the new rules of real estate equity management, I highly recommend the following books: Missed Fortune 101 by financial strategist, Douglas Andrew and The New Rules of Money by noted financial planner, Ric Edelman.

Bill Reidy, CMPS

With over twenty years of experience in the real estate lending profession, Bill Reidy has helped hundreds of families realize their home ownership dreams and achieve their financial goals.

Bill is committed to his clients and is dedicated to making sure that they receive the highest level of service combined with a mortgage strategy that gives them the lowest cost loan over time.

For more information on Bill Reidy or to contact him, please visit his web site at: http://www.williamreidy.com/

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