Are You House Rich But Cash Poor?

Are accelerated mortgage payments killing your cash flow? Many people are sinking as much as 50% of their gross wages into their mortgage payment so that they can pay off their mortgage as quickly as possible.

They do this because they know that over the 30 year life of a typical home mortgage they pay over three times the home's value in interest. They are encouraged by the banking industry to make extra principle payments, pay every two weeks instead of once a month, or refinance to a 15 or even 10 year loan to "rid" themselves of this burden as quickly as possible.

What they fail to realize is that the bank will actually make up to 5 times as much money off a 15 year mortgage as they do off a 30 mortgage. What do the banks know that we do not?

Accelerating your mortgage payment can be a part of a smart financial plan but only if you do it wisely and carefully. Sadly, most people do not take the time or do not have the training to approach the acceleration of the mortgage payoff in the correct way.

Consider this – If you were to separate the equity from your home and put it in a safe, liquid side fund, you could grow that equity and use it to fund that mortgage. At the end of your mortgage term, you would have your house paid off and the original equity drawn out for your retirement savings.

Now is the perfect time to implement this strategy. Many have seen homes increase to more than 120% of their appraised value in just the past few years. The fact is, most homeowners have three times more equity in their homes than in all of their other assets combined.

So, is it a bad idea to be over-weighted in homeowner equity? Yes, and for several reasons.

First, homeowner equity is NOT a liquid asset. You can’t just call up the bank and withdraw equity like an ATM machine. In an emergency, your equity is least available when you most need it.

Second, home value has NO RATE OF RETURN - zero, nada, zilch, bupkis. Remember it's YOUR money locked up tight in the walls of your own house just sitting there doing nothing.

Third, this unemployed home equity is depriving you of huge tax deductions and another stream of income to the tune of literally thousands of dollars per month.

However, there is a way you can maintain control of your homeowner equity and add a rate of return to your home value. Learn how you can safely accelerate your mortgage payoff by using that slush fund of equity to fund your mortgage, increase your tax deductions, and lock up a rate of return to pay off your mortgage faster and keep more of your hard earned money.

I’m Steve Minnich, a Licenced Retirement Savings Advisor. As a former business math and personal finance teacher, I educate my adult "students" on how to manage their home equity to THEIR OWN advantage. I have the background, expertise, and licensing to provide knowledgeable guidance. Anyone who wishes to save toward retirement instead of sending loads of money to the bank, should spend some time investigating this process.

In my live seminars I teach folks how they can turn that lazy equity into income and accelerate the pay-off of their mortgage the smart, sensible, and safe way.

I share real life examples that demonstrate how others in your same position have been able to use these common sense strategies to achieve their long term and short term financial goals.

In this bog, I intend to share this well-thought-out instruction at no cost to you. You are invited to share your thoughts on this interesting subject.

But don't expect me to try and sell you something. I'm first and foremost an educator. I've never been comfortable calling myself a salesman. Salesmen, to my way of thinking, are good at talking folks into buying something that they really don't need and probably don't want with money they cannot afford to spend.

I simply explain options and teach basic concepts of good money management. Educated people typically make good decisions if they have been given accurate information in a well organized and constructive way. I like to call this: Information Without Obligation.

I teach people how they can better save for retirement by carefully managing the equity in their homes. Would you like to learn how to retire younger and richer without spending a dime more than you are currently spending? I’ll be most happy to answer any and all serious questions about home equity management. Contact me at 509-671-7187. Thanks!