For most people, the only possible mortgage plan is to pay it off as quickly as possible.
There’s nothing wrong with this attitude in general, but did you know there are many situations where it may not be best?
For instance, what if you pay your loan off in 15 years, just as Junior is entering his freshman year at college? You’re footing the bill, so you tap home equity to pay for school. Unfortunately, you may end up paying a much higher rate than you could have if you had put your extra dollars toward a college savings plan rather than your home loan.
Many other scenarios relate just as well. For example, how do extra mortgage payments stack up next to investments in retirement savings? The purchase of adequate insurance coverage?
We’re always happy to have a conversation about the future benefits you may realize when you establish a well thought-out plan specific to your needs today. After all, taking action now is the best way to achieve your goals for tomorrow.
One of the cornerstones of good planning is leaving clear instructions. Dying “intestate” (without a will) leaves your heirs or even the courts to make decisions on your behalf. Without a will, chances are good that things would not be done the way you would prefer.
If you’ve already taken care of this, kudos. If not, move it to the top of your to do list.
Diversify your Income
Is your retirement savings account looking a little thin? Owning investment property is not for everyone, but it can be a good diversification strategy.
Common retirement accounts should be contributed to often. A well-structured investment property allows you to make one contribution (down payment and closing costs) and then let your tenants pay for the rest.
Over time, you may build:
• Equity through amortization;
• Deductions through depreciation;
• Income from cash flow; and
• Extra equity by appreciation (the good market willing).
You do if you have a well-structured mortgage and financial plan!
The “insurance” starts with knowing you’ve anticipated future needs such as maintenance, repairs, improvements, additions or even paying for your children’s education.
Better still, a good plan provides sufficient flexibility. When life confronts you with the unexpected, you already have resources in place.
A mortgage plan can be simple or sophisticated. It’s based on your needs and risk tolerance. It takes into consideration your overall financial well-being instead of focusing on just your home.