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Mike
Carruthers:
Should
you or shouldn't you try to pay off your mortgage early? A lot
of people do but is it a wise move financially?
Bert Whitehead:
A lot
of times "mortgage aversion" as we call it, stems from
family belief systems. And if you were brought up in the 50's,
it was a big deal when you paid off your mortgage
Financial advisor
and attorney, Bert Whitehead, author of the book, Facing
Financial Dysfunction, says today things are different.
One of the best
protections that a consumer or family can have against inflation
is having a long term fixed rate mortgage. If you have for example
a 6% mortgage and we went into a bout of inflation maybe after
the Iraqi war like we did after the Vietnam war - mortgage rates
can go up to 14 to16% like they did then. If that happens you'd
love to owe a bank a bunch of money at 6%.
And there's really
no down side to this says Bert because…
If interests
rates go down, you just refinance and your mortgage payments
go down.
However Bert
says it really depends on what you would otherwise do with that
money.
If you're going
to take the money that you were going to use to pay off your
mortgage and blow it on a car, or a trip to Hawaii, or some
new clothes or jewelry, well, then obviously paying off a mortgage
would be better than spending the money. But assuming that you're
going to invest it rationally, then having a mortgage is a good
alternative.
At somethingyoushouldknow.net
I'm Mike Carruthers and that's Something You Should Know.
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