Attitude Adjustment
Home loans are considered as a part of life; however, most home owners look at their mortgages as financial obligations. Once you sign those loan papers, your mortgage does become a financial obligation with consequences if you do not make the required payments. Very few people see their home loans as financial instruments. Can this really be true?
The obvious reason that mortgages are financial instruments is that they allow you to own homes that will eventually appreciate and to build up equity. However, there are more reasons why you need to look at your mortgages in a different perspective. If you do not currently own a home, you need to assess the potential advantages of having a mortgage, such as equity build-up and tax benefits. You may argue that invest the savings that you have instead of use them as downpayment and for closing costs in home purchase. This is a question that requires additional analysis, which we provide in the Rent vs. Own analysis.
If you currently own a home, then you may want to check and see if your current mortgage is helping you reach your financial goals. If your goal is more freedom in your monthly cash flow, then refinance may help you reach that goal. If your goal is to retire in x-number of years, then restructuring your mortgage and mortgage payments may help you reach that goal. If your goal is to pay less interests, then debt consolidation and refinance may help you reach that goal. These different goals may be integrated together in one matrix. For an example, more freedom in monthly cash flow can allow you to restructure your mortgage payments so that you may pay off your mortgage in x-number of years.
The critical element is your attitude toward mortgages. Once you see them as financial instruments, then your mind will be opened up to see the many possibilities that you have to turn your mortgage into a financial instrument that helps you reach your financial goals.
