HOME EQUITY MANAGEMENT

A Mortgage is a Financial Instrument within
the Context of a Financial Plan

One of the largest assets on a family’s balance sheet is home equity. Most people mismanage the equity in their home as they have goals to try and pay off their home the quickest way possible but may be going about it the wrong way. Rather than paying down a mortgage with additional principal payments, bi-weekly payment plans, or simply a huge down payment, it is proven to be beneficial to manage a mortgage within the context of a financial plan.

In his book, “Ordinary People Extraordinary Wealth,” Certified Financial Planner and New York Times Best Selling Author Ric Edelman declares that we’ve been taught by conventional wisdom to make a big down payment, get a fixed rate mortgage, make extra principal payments, pay-off the loan early, and that mortgages are a necessary evil. Well, conventional wisdom is wrong. It made sense in the 1940’s & 50’s. Without a doubt, mortgages were very dangerous in the 1920’s & 30’s. But the rules of money have changed. If we continue to follow the old rules, we will fail were our parents succeeded.

We have to recognize the differences in today’s economy as opposed to a generation or two ago. We can thank our parents and grandparent’s for they always taught us to get rid of the mortgage. That is why we think the way we think today. It’s ingrained, inbred.

Back in the 1920’s is when this story began...

Please email me at SVplanner@sbcglobal.net for the rest of this 4 page report.