You see the idea is NOT to drag out your mortgage for 30 years- it is to PAY IT OFF in 12-15 years out of your “structured and disciplined SAVINGS plan”- this way you may continue making the mortgage payments to Yourself INSTEAD of the bank for the next 15 to 17 years.

For example: If you were paying $1,000 a month on your mortgage – after you pay-off your mortgage in 12-15 years you will then continue paying yourself the $ 1,000 a month- If you did that over the next 15-17 years you would end up with a significant amount of money in YOUR pocket not the banks pocket.

In addition you will also be creating a significant amount of liquidity in your portfolio, thus avoiding the need to ever have to borrow money again. Imagine all the money you would save in interest over your lifetime!

Let me first start my disclosing- I’m a Financial Planner and have clients thought most of the United States.

It’s alarming for me to see the amount of people all over the country who are “neck-deep” in all of these “fancy” types of mortgage arrangements. They are not only killing their OWN future but as a NATION we are killing our financial future by perpetuating the false idea that we must leverage our money by using “other people’s money”!!!!- It’s a bunch of HOGWASH!!!

A 50 year mortgage is nothing more than a FINANCIAL PRISON!

If you take a hard look at where the vast majority of your money is spent you will notice that the bulk of it goes to pay: INTEREST and TAXES. And that is a FACT!

Yet all of the financial advice out there revolves around INVESTING rather than SAVINGS.

If you TRULY want to get ahead, financially speaking, you MUST focus on CAPITALIZATION- THEN you can start worrying about investing…if not, we will continue to be a slaves to banks, credit card companies and the IRS for the rest of our life’s.

If you do things the right way- there should be NO REASON for you to pay a mortgage for more than 12 years. That’s right! in an average of 12 years the majority of homeowners in the US can be paying themselves what they are now paying to their bank and saving that money for retirement instead.

Please note that I am not advocating the use of 12 or 15 year mortgages either, because by using those type of mortgages you in fact are “crippling” yourself by tying up your money in your home- the key is to capitalize in liquid assets- this way every time you have a large capital need (i.e.: buying a car, college education, home improvements, medical emergencies etc.) you won’t have to run to a bank or credit card to borrow money- you’ll just borrow your OWN money instead, and pay yourself what you would have paid the bank- this way the money ends up in YOUR pocket instead!

The best course of action would be to get the lowest FIXED interest conventional mortgage and incorporate a structured and disciplined SAVINGS plan (notice I said savings NOT investing- the difference is that in savings you have 0% risk of losing your money- the same CANNOT be said about investing).

There is a strong chance that something similar could happen not only in the US but also other countries such as England. I don’t know how so many people don’t understand this, but the reason why real estate had a massive boom was largely due to low interest rates. People want a nice home, and they can pay more. Now the supply is exceeding the demand in many markets and people are waking up.

In my book, you buy a house to OWN it, not pay for it continually for the rest of your life. And say what we will about ethics… but a 50-year mortgage was conceived because there was demand for it. The whole problem comes down to sheer materialistic greed both on the side of the bank (to make money from the loan) and on the part of the buyer (to have a bigger house than the Joneses).

~fm