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wealth: Reason #10--Mortgages give you greater liquidity and flexibility. - 03/05/10 01:58 PM
(I just realized that my 10 part series had only 9 parts! Sorry for the delay in getting out Reason #10)
You may have heard this one before, but let's take a look at the tale of two brothers. Both brothers are exactly the same age at 25, both make the same amount of income at $75,000 per year, both have $40,000 in savings, and both want to buy a house for $200,000. Let's assume for the sake of an easy example that both have no other debts besides their mortgages.
The first brother decides that he wants to put … (0 comments)
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wealth: Reason #5--Mortgages are Tax Favorable - 12/08/08 12:57 PM
Not only are mortgages tax deductible (check out my previous post, Reason #4--Mortgages interest is tax deductible), they are also tax favorable. What does this mean for you?
Consider two scenarios. You have a mortgage that costs 6% in interest and you have also earned 6% on your invests over the course of one year. The mortgage interest is deductible at all levels of income tax brackets. The money you have earned in interest on your investments is taxed as low as 15% (depends on several factors).
So, your mortgage will actually only cost you 4.5% after taxes, while your investments will net you a 5.1% … (2 comments)
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wealth: Reason #3--Mortgages are relatively cheap money - 12/01/08 10:19 AM
Let's compare two different types of loans: mortgages and/or credit cards. Interest rates on mortgages are currently in the 4-10% range where as interest rates on credit cards are in the 8-30% range with the average somewhere around 15%. Why is this so?
When you borrow money for a mortgage, you use your home as collateral. If you fail to repay your mortgage debt, the bank can (and will) recoup their money by repossing their property. This is called foreclosure. Contrast that scenario with a credit card. If you buy a nice Armani sweater with your credit card and you fail … (0 comments)
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Jeff Trevarthen
Campbell,
CA
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Accessbanc Mortgage
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Cell Phone: (408) 761-6849
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