Using A Mortgage As A Financial Tool








I hear way too often about 15 year fixed rate mortgages and putting down over 20% to avoid the mortgage insurance.  There are many things to consider before doing either of these.  Leverage is good when used correctly and your mortgage can be used as a financial tool to increase your net worth.

Every single borrower’s circumstances are different so make sure you do not generalize or listen to your financially struggling friends, family, neighbors, and co-workers.  Here are some items to look at:

  • Retirement – are you maxing out your retirement?  I am not just talking about your 401(k) but other retirement plans you could or should be using such as an IRA, life insurance, etc.
  • Reserves – how much money will you have leftover after closing?  You really should have 6-12 months of liquid assets leftover after closing
  • Debt – how much credit card debt do you have?  Remember that interest on a mortgage is tax deductible but not on a credit card
  • Home Improvements – Does the house need work done?
  • The list goes on …….

Make sure to consult your Financial Planner and if you don’t have one I would be happy to refer you to a great one.