Lending Company Puts Forth A New Philosophy

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 everThe rules are changing and perhaps the old practices
need to be revampedGEL calls its new philosophy, “Harnessing
The Power of Your Mortgage” In 2004,credit card debt accounted
for over half of the $21 trillion of consumer debt in the US,
quadrupling over the last decadeToday,the average American
household has $9,000 of credit card debt at 16% interestTo pay
that average off,at that interest rate would take ten
years,totaling over $8,000 in interest when all is said and
doneThe financial impact of this,which is virtually unrealized
is devastatingGEL claims to have a better wayTheir thinking is
that since you must borrow money over the coarse of life,why not
borrow it as inexpensively as possibleCredit cards,auto
loans,and personal loans are all high interest and non
deductableSo 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 depressionThat
philosophy is as such:First get the lowest rate
mortgage,then,set up a bi-weekly payment plan,and,whenever
possible send in additional paymentsThis 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:
1Never send extra money to your mortgage 2Stay away from
bi-weekly plans 3Make the smallest payment with the biggest
tax break 4Putting 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:
1Mortgages don’t lower your homes valueYour home will grow in
value whether or not you have a mortgage 2Your mortgage is the
cheapest money you’ll ever buyWhy pay credit card at 18%,when
you can borrow at rates under 7% 3Your mortgage is the best
way to lower your taxesThere aren’t many tax breaks left
Mortage loans,unlike credit cards and car loans are fully tax
deductable 4You should get cash out of you house while you
still canYou may find it difficult to get a loan if something
like a loss of job comes up 5Mortgages become cheaper over
timeMost 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 brothersIn 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 theoryThe results of the study find Brother B
with almost a one million dollar advantage over Brother AThe
full hypothetical can be viewed on http://yourbighousecom, 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 placesThat,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://YourBigHousecom

Tags | author, consumer, edelman, Finance, global, household, loans, money, mortgage, philosophy, result, times, york