Change is coming to America. Barack Obama said it, and the American people proved open to his message. Are you ready to put your mortgage on a diet? Hold on for the ride. A paradigm shift is necessary. Utilizing banking tools and making every dollar either earn interest or cancel interest is the best debt buster and wealth builder.
Are you open to changing the way you pay off your debt and build wealth? Begin with changing the way you pay off your 30 year mortgage. Did I say 30? That’s a relic of the past. Forty and fifty year mortgages are now being offered in both the U.S. and Canada. In fact, 50% of mortgages in Canada today are amortized over 40 years (in the past, that number was usually 25). Who would have ever dreamed? Change continues, whether in America or Canada. The Canadian government recently said it would no longer back mortgages over 35 years. How many of you used maps in the past to help you reach your destination? If you are near my age (55), I imagine a lot of you nodding recognition. Perhaps you recall the improved days of AAA Trip Tickets guiding you to your destination? Still younger? You probably used MapQuest. If you’ve never known anything other than a GPS for easy navigation, maps probably sound ancient, and me, old. What did we do before GPS systems? I can barely stand to think of those days. Have we changed along the way? You bet we have. Although 40/50 year mortgages initially surfaced during the high interest rates of the 80’s in the U.S., today they are a result of the rise in property prices in both Canada and the United States. They offer the only way many people can afford a monthly mortgage payment that allows them enough extra to put food on the table. That’s the good news. The bad news is that these mortgages create, not just greater long-term debt but, life-long debt. A borrower with the 50-year mortgage builds equity very slowly. In USA Today (May of 2006), mortgage experts cautioned that they are best-suited for those who plan to stay in their home for about five years, while the loan’s interest rate remains fixed. Do you desire financial freedom? If you answered in the affirmative, you must choose the best debt busters and wealth builders:
- Think and perform like a bank, learning to utilize the banking tools of interest accumulation, interest float, and interest cancellation
- Utilize a Personal Financial GPS that creates discipline and calculates in more complex ways
- Understand the bottom line consequences of your spending habits, realizing that it can change your life
Like the GPS in your car, my Personal Financial GPS does not ask, Where have you been? or How long have you been there? It is proactive. Its sole mission is to get me from where I am to where I want to be. Once you begin, the system gives specific directions, taking the fastest and most efficient route as it leads you to your new destination, financial freedom. I ask people questions such as, “How much are you earning from the equity in your home?” They often look perplexed and reply, “Nothing.” I nod my head in agreement, saying “Exactly…ZERO!” If the banks were doing what most of us have done all of our lives, they would be fired by their board of directors. Ouch! The truth hurts. That’s when you know you need the best debt buster, Mortgage On A Diet.Most people realize you can do the following:
- Make large lump sum payments to your principal and pay down your mortgage sooner
- Make biweekly payments and pay off your thirty-year mortgage in twenty-three years
- Refinance and pull out your equity
- Sell your home and keep your equity
What’s the caveat with the above scenarios? You have to pull money out of your own pocket in the first two situations. Do you have “under the mattress” money or winnings from the lottery to apply against the principal balance? That would apply to number one. I’m a clone of 98% of Americans. I don’t make biweekly payments because it means pulling cash out of my pocket. That leaves out number two. Number three? Good luck with this approach in today’s economic climate. You are darn lucky if the bank will do a HELOC (Home Equity Line Of Credit) at 80% LTV (Loan to Value). With almost one in five homeowners in a negative equity position, meaning they owe more than their home is worth, you can kiss that opportunity good-bye. The problem with the fourth is obvious. Homes are not selling quickly, nor are they selling for what the homeowner is asking. This brings us to number four. The answer is a ditto to number three. WHAT EQUITY?
As an investor, I like to gain by utilizing OPM (other people’s money). I’m paying off my mortgages and debt in record time without taking a penny out of my pocket. I’m not refinancing, changing my mortgage payments, or altering my spending habits. Sound too good to be true? I opened my mind to think like a bank. I realized there are things I can do to cancel interest and manage my cash flow, using my Personal Financial GPSto significantly alter my path to financial freedom. It’s just math…not magic.
Did I also mention that investing at a very conservative 6% the money from years of “no mortgage payment” will make me a millionaire, rather than simply a bona fide home owner? That fits my idea of financial freedom better than simply dancing in the street at my mortgage burning party. Not everyone was intended to be Lewis & Clark, capable of navigating their way across terrain that is difficult. Let’s face it. I need some help. America needs some help. I am not too proud to ask for it. Watch out Canada. You are right behind us. I welcome a tool that offers a financial dashboard, and shows me the bottom line consequences of my debt and spending habits, as it adapts to my real life situations. I like a mirror I can’t ignore. I never had it before. Now I do. As a real estate investor, I research and remain open to tools for creating my financial freedom. Likewise, I have a responsibility to clients, such as those who lease option from me, to offer the best available on the market. Personally, I didn’t want to talk about change, while continuing down the old financial path. I found myself saying, “There’s got to be a better way!” I am excited about a system that levels the playing field and creates equality for all people. That is what the American dream is supposed to incorporate. Carpe Diem!
(c) Copyright – Dorothy Jean Berry. All Rights Reserved Worldwide.