Kim and Spencer discuss why paying off your mortgage early may not be the best strategy for financial prosperity, as emotional attachment to homes can lead to emotional decision-making. The time value of money and opportunity cost must be considered, and the best mortgage loan is a 30-year fixed interest rate mortgage paid over time and refinanced until the borrower dies. Redirecting extra mortgage payments towards paid-up life insurance can be more efficient in building an asset that is not taxed. The goal is to keep refinancing, eventually do a reverse mortgage to free up equity, and educate oneself on the concept of time value of money.
Best-selling author Kim Butler and Spencer Shaw show you how to take more control of your finances. Tune in to The Prosperity Podcast to learn more about Prosperity Thinkers thinking and strategies today!
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Show Notes
- Prepaying your mortgage may not actually be a good idea
- The time value of money and opportunity cost are important factors to consider when it comes to mortgages
- A 30-year fixed-rate mortgage is the best option, and it’s okay to refinance every 10 years or so
- Emotions often drive decisions regarding mortgages, but it’s important to step back and make decisions based on finances and long-term goals
- For those who feel stuck in the belief that they must pay off their mortgage, it can be a difficult hurdle, but withdrawing from the cash value of life insurance may be an option for peace of mind
- Education is key in helping people make informed decisions about their mortgages
- Objectives and methods should be clearly defined to reach financial goals
- Refinancing and reverse mortgages are strategic ways to free up equity
- Contrary beliefs about mortgages may require multiple listens to understand
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