Managing your mortgage means you stay focused on the end result, becoming
mortgage free. This entails the following:
• Shop in a manner that forces commodity pricing.
• Mange your monthly expenses, using your discretionary dollars to pay down
debt.
• Never refinance unless you can lower the cost of your debt and pay off your
debt earlier.
Over the long run, this strategy will yield huge dividends. The key phrase in
this sentence is over the long run. Because of the long-term nature of your
mortgage debt, the monthly spending decisions you make and the approach you take
when refinancing your mortgage debt will have an immense impact on your ability
to become mortgage free. You must retain a long-term mind-set and deploy this
into your monthly, short-term decisions.
You’ll make better financial decisions as long as you keep the endgame in mind:
paying off your mortgage. Wealth isn’t measured solely based on your assets;
it’s measured by the absence of liabilities (monies you owe). If you don’t have
liabilities, you obtain the freedom to spend your time as you choose. You can’t
do that if you end up strapped to a mortgage when you’re sixty-five years old.
The American Dream is like freedom: it cannot be borrowed. Our freedom as
Americans has been purchased and paid for with the bravery of those who fought
for it – many to the death. Being leveraged isn’t the American Dream. Neither is
owning a home. Having paid for your home? Now that’s the American Dream.
The problem with most home owners is they don’t take into consideration
wealth-building decisions when determining what to do with the money that’s left
over after they pay their bills. Your mortgage plays a significant role in how
you spend this money because each month you have the option to reduce your
mortgage debt. This will save you thousands of dollars in interest along the way
and accelerate your mortgage payoff date.
Most home owners don’t’ think about their mortgages unless they are cutting the
check for the monthly payment (which isn’t so much fun to think about if the
payment is getting out of hand) or they are reacting to some prod from a lender
telling them it’s a great time to refinance (which sounds good if it’s going to
reduce your payment). These home owners have not created a sound refinance
strategy. They don’t have the tools to help them determine when to refinance and
what to do with the enhanced monthly cash flow (which is all too often referred
to as monthly savings). Instead, they allow the mortgage industry to lead their
decisions, acting only when a lender tells them why it’s a great time to
refinance. That’s not in your interests – it’s in the lender’s interest. You
can’t count on anyone else to make refinance decisions for you. Proper
stewardship over your home, your mortgage, and your finances is your
responsibility. It therefore stands to reason you should obtain the appropriate
level of knowledge to make wise decisions.
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