Do Not Pay Down Your Mortgage


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Do Not Pay Down Your Mortgage

  1. 2. New Year Financial Resolution Get your mortgage in shape!
  2. 3. Your 2008 Resolutions <ul><li>Pay down your mortgage as soon as possible </li></ul><ul><li>Buy a new home, second home or investment property </li></ul><ul><li>Get your credit score in shape </li></ul>
  3. 4. Shall I Pay Down My Mortgage? <ul><li>What do most people do when they want to pay down their mortgage? </li></ul><ul><ul><li>They make additional payments to pay it off faster. </li></ul></ul><ul><li>But is it a wise decision? </li></ul>
  4. 5. Shall I Pay Down My Mortgage? <ul><li>Tax Bracket: 33% </li></ul><ul><li>Long-Term Capital Gain: 15% </li></ul><ul><li>Loan amount: $500,000 @ 6% </li></ul><ul><ul><li>After Tax Rate: 6% - 33% = 4% </li></ul></ul><ul><li>Investment opportunity: 8% </li></ul><ul><ul><li>After Tax Rate: 8% - 15% = 6.8% </li></ul></ul><ul><li>Disclaimer: Please consult with your Tax Advisor. </li></ul>
  5. 6. Shall I Pay Down My Mortgage! <ul><li>You have an extra $500 per month for the next 10 years and you have two choices: </li></ul><ul><ul><li>#1: Pay down your mortgage </li></ul></ul><ul><ul><li>#2: Invest </li></ul></ul><ul><ul><li>What is your choice? </li></ul></ul>
  6. 7. Do Not Pay Down Your Mortgage! <ul><li>After 10 years… </li></ul><ul><ul><li>With option #1, you saved $13,625 </li></ul></ul><ul><ul><li>With option #2, you earned $111,412 </li></ul></ul><ul><ul><li>Who made </li></ul></ul><ul><ul><li>the right choice? </li></ul></ul>
  7. 8. Do Not Pay Down Your Mortgage! <ul><li>With Option #2, you have: </li></ul><ul><ul><li>Minimize your taxes (33% vs. 15%). Long-Term Capital Gain is taxed at a lower rate than regular income. </li></ul></ul><ul><ul><li>You keep your cash! Cash is king! </li></ul></ul><ul><ul><li>You have a net gain of $97,787 </li></ul></ul><ul><ul><li>Ok, you have still a mortgage…but you can still pay it off! </li></ul></ul><ul><ul><li>mortgage financing is cheap.. </li></ul></ul><ul><ul><li>but use it wisely </li></ul></ul>
  8. 9. Get In A “Home Buying” Shape! <ul><li>If you buy a new property, you should: </li></ul><ul><ul><li>Put the lowest down payment as possible and leverage the bank money, not yours! </li></ul></ul><ul><ul><li>Keep your cash and invest it! </li></ul></ul><ul><ul><li>Keep emergency funds in case of job loss, health and other unexpected issues </li></ul></ul>
  9. 10. Get In A “Home Buying” Shape! <ul><li>If you buy a property and you should work with a professional who can: </li></ul><ul><ul><li>Optimize your credit history even if you think it is perfect! </li></ul></ul><ul><ul><li>Advice you on top secret strategies (most business credits cards are not reported on your credit history) </li></ul></ul><ul><ul><li>Optimize your borrowing ability to get the financing solution that is right for you! </li></ul></ul>
  10. 11. The Difference is the Advice <ul><li>The secret of the industry is that money is… UBIQUITOUS. </li></ul><ul><li>However great down-to-earth advice is NOT. </li></ul><ul><li>As I a Certified Mortgage Planner (CMPS), I strive to provide with the best advice for your financing situation. </li></ul>
  11. 12. Who Is A Good Referral? <ul><li>Great people… </li></ul><ul><ul><li>who care for service </li></ul></ul><ul><ul><li>who care for advice </li></ul></ul><ul><ul><li>who want to establish a long-term relation with a professional </li></ul></ul><ul><li>Great people…like you! </li></ul>