What is the real cost of a mortgage? Should you be paying off your mortgage as fast as possible? If so, what is the safest way to do it? We show our clients how to lower their mortgage interest payments and total cost while maintaining access to their equity, without any changes to their current spending habits.
First, let’s take a look at today’s mortgage landscape. With the collapse of the housing bubble, the emphasis has shifted from accumulating equity to simply managing the debt. What hasn’t changed, though, is that it’s all about the getting the payment right. From the 80’s, with the advent of adjustable-rate mortgages and negative amortization products, through the 90’s, with hybrid ARM’s that are fixed for 3, 5, or 7 years, to the 2000’s, with interest-only products, and even 40-year products, the focus has been on getting the payments to be comfortable -- so we can afford to buy and stay in our home. This obsession with payment led to people ignoring the challenge of actually paying the debt off. One might even make the case that all the mortgage innovations of the last decades have even contributed to home price bubble, due to their ability to make larger mortgages possible for more people. Now people are beginning to realize the process of actually paying off the loan has been postponed too long.
Actually keeping a 30 year mortgage from 1 st inception all the way to final payoff is a rare occurrence. Most home owners only keep their mortgage for between 5-7 years.
