Lending Company Puts Forth A New Philosophy

An interesting concept is being put forward by abreak.
company called Global Equity Lending which,according4.Putting extra money toward your mortgage is like
to them,is rooted in the fact that building a secureputting it under the matress.
financial future is more difficult thanever.The rules areTo back up his claim,Edelman offers five distinct
changing and perhaps the old practices need to bereasons why you should carry a long loan:
revamped.GEL calls its newphilosophy, "Harnessing1.Mortgages don't lower your homes value.Your home
The Power of Your Mortgage"will grow in value whether or not youhave a mortgage.
In 2004,credit card debt accounted for over half of the2.Your mortgage is the cheapest money you'll ever
$2.1 trillion of consumer debt in the U.S.,quadrupling overbuy.Why pay credit card at 18%,whenyou can borrow
the last decade.Today,the average Americanat rates under 7%.
household has $9,000 of credit carddebt at 16%3.Your mortgage is the best way to lower your
interest.To pay that average off,at that interest ratetaxes.There aren't many tax breaks left.
would take ten years,totaling overMortage loans,unlike credit cards and car loans are fully
$8,000 in interest when all is said and done.The financialtax deductable.
impact of this,which is virtually unrealizedis4.You should get cash out of you house while you still
devastating.GEL claims to have a better way.Theircan.You may find it difficult toget a loan if something
thinking is that since you must borrow moneyover thelike a loss of job comes up.
coarse of life,why not borrow it as inexpensively as5.Mortgages become cheaper over time.Most times
possible.Credit cards,auto loans,andpersonal loans areyour payment will stay the sameover the years while
all high interest and non deductable.So why notyour income rises,making it easier to pay over time.
harness the power of yourmortgage?To further illustrate their beliefs,GEL presentations
According to GEL,Americans operate under ainclude a case study called,"The Tale of Two
mindset,when it comes to personal finance,thathasBrothers", where they do a financial comparison of
been burned into our country's psyche from the daystwo fictional brothers.In the story,Brother A,ashe is
of the great depression.That philosophyis as such:Firstcalled follows the "old" way of thinking,while his
get the lowest rate mortgage,then,set up a bi-weeklybrother(yes,you guessed it,brother B)uses
payment plan,and,wheneverpossible send in additionalGEL and Edelman's theory.The results of the study
payments.This way you pay off your mortgage asfind Brother B with almost a one million dollaradvantage
soon as possible.over Brother A.The full hypothetical can be viewed on
Sound good to me,right?Well,much to my suprise,thisbut thejist is that the second brother used the money
company claims that is exactly what weshould NOThe saved carrying an interest only loan,or
be doing!On the contrary,their idea is one which isGEL'sfamous "power option"loan to invest in other
echoed by New York Times Bestplaces.That,combined with the mortgage tax
Selling author of "The New Rules Of Money",Rickbreakslead to the million dollar separation after 30
Edelman,who says,"You should get a big,30yearyears.
mortgage and never pay it off."Edelman and GEL putSo,if you believe in this new way of thinking,and are
rules forth which read like this:ready to follow the model(in other words,
1.Never send extra money to your mortgageREALLY, put that extra money to work for you),then I
2.Stay away from bi-weekly plans.believe an interest only loan or GEL's poweroption loan
3.Make the smallest payment with the biggest taxis the way to go,but be careful.