| Look in your wallet. The cash you see is not being | | | | mortgage drastically reduces your interest |
| invested and is not making you more money. | | | | payments. Great! But, wait. What kind of tax |
| That dollar in pocket change will buy you a soda, | | | | savings do you get through out the term of the |
| but soon it's gone and that indicates a temporary | | | | loan? Considering the fact that interest in |
| value because you will get thirsty again by | | | | mortgage loans is tax deductible, you have not |
| tomorrow. Each month you pay your house note, | | | | gotten much of a tax break. So what? You own |
| that money isn't working to make you more | | | | your home after 15 years, right? |
| money, but it is giving you value. Value is | | | | What if you lose your job? Become injured? |
| something that will increase. Paying your house | | | | What if you are 50 and fifteen years away from |
| note gives you value because your house, as a | | | | retirement? Is it a good use of your money then? |
| general rule, will go up in value. But, does it go up | | | | Take half of that money you were going to use |
| at the same rate as the interest you pay? If it | | | | for a down payment and invest it in real estate |
| does not, is that a problem? | | | | property. Get a 30 year loan, instead of a 15 year |
| On the surface, it seems that it is the smart thing | | | | loan. The amount of interest you pay goes up, |
| to do to pay off that house mortgage as quickly | | | | yes, but you get a tax deduction on it. It takes |
| as possible. It also seems smart to either get a 15 | | | | self-discipline for this to work, but you can take |
| year loan or to make double payments with the | | | | the money you save on the lower monthly notes |
| idea to reduce the amount of interest you are | | | | and invest this, too. At the end of 15 years, you |
| paying as well as paying off the mortgage sooner | | | | not only have your tax savings, but you also |
| with the added benefit of more equity, faster. | | | | have the savings and investments that are at fair |
| Is that a good and valuable use of your income? | | | | market value more than what you owe on the |
| Most folks would say yes, no question. | | | | balance of your home mortgage. |
| If we dig a bit deeper and look at the situation | | | | What most people do not realize is that equity in |
| from a different angle, we can see another | | | | your home is not earning you a return on your |
| dimension to this value question. Let's say that | | | | investment. Real Estate investment properties |
| you have a great job and great credit. You get a | | | | yield a greater return than do most other forms |
| fifteen year mortgage loan for a home making a | | | | of investments in the long term. When your |
| large down payment. Your monthly notes are | | | | investment pays for itself through rental income, |
| rather high, but you were prepared for it. The | | | | that will equal greater leverage and greater value |
| large down payment, and the shorter term | | | | for your dollar. |