The goal of owning your St. Cloud home free and clear is usually thought of as the sunniest eventual outcome of the process that begins with buying your St. Cloud house. The vision of the day when you make that last mortgage payment is an attractive one: whether in retirement or sooner, a “free rent” future has great appeal.
So when financial planners argue against the wisdom of paying off your mortgage, it makes for interesting reading. One such planner is Ric Edelman, whose article “11 Great Reasons to Carry a Big, Long Mortgage” presents a laundry list of the possible financial benefits. As one of the nations’ foremost financial advisers, Edelman also has a well-earned reputation for brash presentations (his PBS series made the most of that). And he really does list eleven reasons why “you should have as big a mortgage as you can get and never pay it off.”
Some of the reasons are fact-based—but not really pertinent. For instance, Reason #1 is that your mortgage doesn’t affect your home’s value. True: whether its value rises or falls depends largely on the current St. Cloud market…but that isn’t a reason for or against carrying home loan debt.
The same is true for Reason #2, which is that a mortgage “won’t stop you from building equity…” The logic here is the same: even if you never paid down your home loan’s principal at all, if the expected market value rises (it’s “almost certain to grow in value over the next 20 years”), your equity would grow independently.
More convincing are the remaining nine reasons, leading off with Reason #3, “A mortgage is cheap money.” This will earn head nods from every financial analyst, and it’s doubly true with today’s incredibly low interest rates. It may only be useful to those who have ideas for places where the “cheap money” can produce juicy profits—but what financial planner can’t suggest a few?
The other reasons deal with:
-the dwindling real cost of mortgage payments over time due to inflation
-the liquidity provided by refinancing (“selling without selling”)
-the wealth creation possibilities of money invested sooner rather than later
Each of these can be illustrated by graphs and charts (and believe me, they are).
Whether you are more of the less-owed-the-better mindset or Edelman’s big long mortgage school, one thing holds true in both cases: buying your St. Cloud house is the necessary first step. I can be of immediate value in that department—call me to see what I mean!
Providing a superior level of informed, professional real estate services to buyers and sellers throughout Central Minnesota. From Maple Grove to St. Cloud, we have professional Realtors ready to assist! Residential & Commercial Real Estate, Sauk Rapids Real Estate, Sartell Real Estate, Waite Park Real Estate, Rice Real Estate, St. Joe Real Estate, Foley Real Estate. Milaca Real Estate, Litchfield, Maple Grove and surrounding communities. Whether you're looking at buying or selling home in St. Cloud, multi-family units in Sauk Rapids, land in Rockville or any property in Central Minnesota, we are the dedicated professionals to call for your needs. Premier Real Estate Services has offices located in St. Cloud, Milaca, Litchfield, Hutchinson, and Maple Grove. We intend to be your PREMIER source for all your Central Minnesota Real Estate Needs.