Are you planning to move in the next 5 years?
At one time I thought that keeping more of my paycheck for myself rather than paying more towards your mortgage, was a good financial idea.
I was told that paying of my mortgage later in life is the best financial idea ever. Keep as much in my pocket now and take care of the mortgage later.
Did your financial advisor ever tell you that paying off your current mortgage is a bad idea especially if you plan to move to another home?
What you may not know that acting on this advice can provide you with a little extra money now but a lifetime of mortgage payments … maybe 37 years, 47 years or even even longer! It all depends how many times you move.
Think carefully about this.
The banks charge you interest on an amortization basis.
They calculate interest and charge you upfront based on the amount you borrow. You have no control over this.
Now the way it works is that you end up spending more interest in the early years. So let's assume you have a 30 year mortgage.
You do not pay any extra payments upfront to pay off your mortgage principal. You move home. What happens next?
The banks have been keeping a big secret from you as they are counting on you moving every 5 to 7 years and expect you to make a lifetime of interest payments.
There is another way.
You can pay off your mortgage faster without spending more of your money.
They have created a HELOC account which can help you achieve this goal but will not tell you about it for obvious reasons.
They disguise the fact that you can turn your HELOC account into a checking account, which will allow you to pay less interest and pay of your home early.