Title:
Lending Company
Puts Forth A New Philosophy
Word Count:
680
Summary:
An interesting
concept is being put forward by a company called Global Equity Lending
which,
according to them,is rooted in the fact that building a secure financial future
is more difficult than
ever.The rules are changing and perhaps the old practices need to be
revamped.GEL calls its new
phil
Keywords:
mortgage
loans,home loans,loans,mortgage,lending,h
Article Body:
An interesting
concept is being put forward by a company called Global Equity Lending
which,
according to them,is rooted in the fact that building a secure financial future
is more difficult than
ever.The rules are changing and perhaps the old practices need to be
revamped.GEL calls its new
philosophy, "Harnessing The Power of Your Mortgage"
In 2004,credit card debt accounted
for over half of the $2.1 trillion of consumer debt in the U.S.,
quadrupling over the last decade.Today,the average American household has
$9,000 of credit card
debt at 16% interest.To pay that average off,at that interest rate would take
ten years,totaling over
$8,000 in interest when all is said and done.The financial impact of this,which
is virtually unrealized
is devastating.GEL claims to have a better way.Their thinking is that since you
must borrow money
over the coarse of life,why not borrow it as inexpensively as possible.Credit
cards,auto loans,and
personal loans are all high interest and non deductable.So why not harness the
power of your
mortgage?
According to GEL,Americans operate under a mindset,when it comes to
personal finance,that
has been burned into our country's psyche from the days of the great
depression.That philosophy
is as such:First get the lowest rate mortgage,then,set up a bi-weekly payment
plan,and,whenever
possible send in additional payments.This way you pay off your mortgage as soon
as possible.
Sound good to me,right?Well,much to my suprise,this company claims that is
exactly what we
should NOT be doing!On the contrary,their idea is one which is echoed by New
York Times Best
Selling author of "The New Rules Of Money",Rick Edelman,who
says,"You should get a big,30
year mortgage and never pay it off."Edelman and GEL put rules forth which
read like this:
1.Never send extra money to your mortgage
2.Stay away from bi-weekly plans.
3.Make the smallest payment with the biggest tax break.
4.Putting extra money toward your mortgage is like putting it under the
matress.
To back up his claim,Edelman offers five
distinct reasons why you should carry a long loan:
1.Mortgages don't lower your homes value.Your home will grow in value whether
or not you
have a mortgage.
2.Your mortgage is the cheapest money you'll ever buy.Why pay credit card at
18%,when
you can borrow at rates under 7%.
3.Your mortgage is the best way to lower your taxes.There aren't many tax
breaks left.
Mortage loans,unlike credit cards and car loans are fully tax deductable.
4.You should get cash out of you house while you still can.You may find it
difficult to
get a loan if something like a loss of job comes up.
5.Mortgages become cheaper over time.Most times your payment will stay the same
over the years while your income rises,making it easier to pay over time.
To further illustrate their beliefs,GEL presentations include a case study
called,"The Tale of Two
Brothers", where they do a financial comparison of two fictional
brothers.In the story,Brother A,as
he is called follows the "old" way of thinking,while his
brother(yes,you guessed it,brother B)uses
GEL and Edelman's theory.The results of the study find Brother B with almost a
one million dollar
advantage over Brother A.The full hypothetical can be viewed on
http://yourbighouse.com, but the
jist is that the second brother used the money he saved carrying an interest
only loan,or GEL's
famous "power option"loan to invest in other places.That,combined
with the mortgage tax breaks
lead to the million dollar separation after 30 years.
So,if you believe in this new way of
thinking,and are ready to follow the model(in other words,
REALLY, put that extra money to work for you),then I believe an interest only
loan or GEL's power
option loan is the way to go,but be careful.
For more info on this new philosophy,go to http://YourBigHouse.com