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chloejoanna · Joined: 20 May 2008 Posts: 37 16.09 Dollars($)

The hidden potential profits in your Mortgage?
I recently read an article questioning the notion of seeking to pay off mortgages. This theory suggested saving money rather than uping payments yeilding potenial profit seemed particularly true of investment properties, where by the long term emotional attachment of wanting to own your home can be cancelled out. The nature of property investment is to be quite savvy with ones money but in light of current finantial climates how best can we make debt profitable? Love to here what others think about this piece, and todays apparent care free attitude to debt...

Guest

Hello.

This is a controversial topic. To own your dream home is always desirable and at the same time you should save a certain percentage of your earnings every month. So you got to decide whether you can afford to pay the monthly mortgage payments even after saving a certain percentage of money for your future. If you the answer is yes then go ahead

charlesarmbruster · Posted: Tue Jun 17, 2008 4:29 pm Post subject:

We live in a credit-based society. When you have accumulated a good credit history, it is wise to use it.

Without credit, you live by your means. With credit, you live by your wits.

If you choose to pay-off your mortgage, you sit on your home equity -- for whatever purpose. If you choose to save/invest disposal income, you will either increase or decrease your resultant cash-equity depending on rate.

Consider the borrower who takes a 15-year mortgage vs. a 30-year mortgage because he can afford it -- he will pay less interest over the life of his loan. If you pay additional principal routinely in a 30-year mortgage, you can effectively pay the same interest in a shorter term as does the fellow in the 15-year product, no matter what rate was on your contract.

However, if you 'spent' that additional principal by investing or saving elsewhere...who knows? I'm not a financial advisor, and by my occupation as a loan officer cannot give financial advice.

The Federal Reserve has published research that agrees with your premise -- I'd be happy to forward the paper to you, or you can research it on their website.

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