Most of us believe that the "Smart" thing to do is to Pay OFF our mortgage as quickly as possible.  In reality it is the LAST thing you should ever do!

  Why do we think this?  The average mortgage is $200,000.  At a fixed rate of 6.5%, the monthly payment is 1264.14.  Over 30 years that totals $455,090 in payments, so "experts" say it has cost you $255,090 in Interest.  But the total interest expense always leaves out two things that dramatically bring down this cost:

  1) Mortgage Interest Tax Deduction!

  2) Inflation and the Time Value of Money!

  Inflation is very real - it has been averaging 4% since WW II.  This cost-sharing deduction with Uncle Sam is a real benefit for most homeowners too.

  When you allow for both of these factors, for those with a 20% Federal and State MTR (47% of all tax returns), the ACTUAL Net cost in Today's $ is only $29,272.  For those with a 35% MTR or higher (30% of all tax returns), their ACTUAL NET Cost for interest in Today's $ is only $7,600!  $21 a month! Or less! REALLY!

 NOT Paying off your mortgage faster is like being given FREE money!  Why rush to payoff a $1 at the cost of a $1, when if you just wait in 20 years it will only cost 46 cents and in 30 years it will only cost 31 cents!  Paying off your loan is the last thing you should do - in fact the "Smarter" way is to NEVER pay it off!

  The Booklet gives you all the tables and charts that illustrates all this, as well as how redirecting the same extra loan payments instead into an IUL policy, as well as using Home Equity Management to do the same, will greatly increase their wealth.  Also shows how the redirection of these payments instead into an IUL will allow them to become their Own Banker to finance their Life!

SAFETY and LIQUIDITY

 The Booklet also shows that it is just plain dumb - when all our homes are subject to total loss at anytime because of hurricane, tornado, flood, earthquake, landslide and wildfire - to use a house made of wood and paper, to store what for most people is most if not all of their wealth.  

 Also that in a time of personal need, the LAST place you want your equity to be sitting is somewhere where someone else has control over your access to it based upon your being able to "qualify".  It is instead much smarter to park it in an IUL where it is "employed" and - if withdrawn - you don't need to "ask" and it never has to be repaid!

   Also shows your client how using these same $'s, they can obtain more financial security with "FREE" Permanent Life Insurance, Long Term Care, Critical Illness and Terminal Illness Cash of hundred's-of-thousands of $'s, that may actually SAVE their life!

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Kiplinger.com: “… your mortgage may be the one debt you want to keep, if you've locked in a relatively low interest rate and aren't planning to retire right away. Paying off a mortgage at, say, 5.5% is the equivalent of earning 5.5% on your money. On average, you should be able to earn 7% or 8% annually on a good mix of stocks and bonds -- a more profitable use of your funds. Paying off your loan also means losing the tax deduction for mortgage interest.”

Don't rush to pay

off that mortgage!

Liz Pulliam Weston

MSN money

“You've got better things to do with your money, like saving for retirement, building an emergency cushion or even living it up a little …

Your money can earn better returns in the market compared with paying off low-rate debt … you should make a much better return than what you can get prepaying your mortgage.”

Retirees: Should You Pay Off Your Mortgage?

Wall Street Journal

May 4, 2005

realestatejournal.com/buysell/mortgages/20050504-powell.html

“It used to be a no-brainer. Retire debt-free, without a mortgage, was the age-old advice that no one dared challenge. Increasingly, however, pre-retirees are heading into retirement challenging conventional wisdom and asking some tough questions: Should they retire with a mortgage or pay it off? Should they consider paying it down faster or refinancing or just do nothing?

"... preretirees who don't pay down or pay off their mortgage before retiring may benefit from the tax savings of deducting their mortgage interest or they may need the income they get from their investments.”