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Articles and Resources to Help Destroy Your Debt: |
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Should I Pay Off My Mortgage? Shocking Myths And Truths To "Is It Smart To Pay Off Your Mortgage?"
Across America, many people are worried about the economy and asking the question, "Should I pay off my mortgage?" Most people know that getting a mortgage is one of the biggest expenses in life. But is it smart to pay off your mortgage? Read on to discover some myths and truths that should help you answer this question. First, let's talk about the myths. The Myth "Don't give up your mortgage. It's the last best tax deduction that you have." The Truth Although your mortgage is a tax deduction, it may not be worth it. Do you realize that you will pay almost 3 times the price of your house over the course of a 30 year loan? Also, if you're in the 15% tax bracket, that means that the government will give you 15 cents back for every $1 in interest that you pay! Does this sound like a good deal? Yet most accountants and tax advisors will speak of this supposedly great tax deduction as if you would be crazy to not have a mortgage. People who think trading $1 in interest to get back 15 cents from the government is a good deal need to think again! The Myth "I have a great interest rate of 6%. Why should I pay off such a low rate?" The Truth Do you really have a 6% interest rate? Look at your last mortgage statement. You will probably be shocked to realize that you really don't have a 6% interest rate! No, that fact is that most people really have an 85% to 95% percent interest rate! How? Did you notice on your statement how the amount of principal you pay is really small and the interest paid is really big? That's because your mortgage company always collects the most interest up front during the first several years. It would only be a 6% interest rate if you paid off your mortgage during the first year! The Truth The average person moves once every 7 years. This means that most people are paying the 85% - 95% interest rates since they're always at the beginning of the loan. This leave most people with very little equity in their home when they decide to move because they have given most of their hard-earned dollars to the bank! The Truth The word "mortgage" comes from the Latin word mortuus which means "death." The word "gage" means to pledge or grip. So you can see that the word mortgage really means "death grip!" There's no question that a mortgage is a long term burden that most people would be better without. There's more to paying off a mortgage then financial numbers and word choices. It's about freedom - financial freedom. Imagine what your life would be like if you had no mortgage payment, car payments, or credit card payments. Wouldn't you be better off? Would you be able to make different choices in your life? Maybe you could stop going to the job you hate because "it pays the bills" and do something else instead. You see, being debt free and mortgage free is really about taking back control of your life!
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