The 30 Year Mortgage Myth
I think it’s funny; that everybody gets so excited about 30 year mortgages and the best interest rates. The whole banking industry has been set up around getting you to want exactly what they want you to get. There are millions and millions of dollars spent marking each and every month telling you what a great interest rate you can get. No body is telling you about a 30 year loan that they know you will never payoff. They are a lot more subtle than that. They sell you on the interest rate and how low you can get your payments so that you will truly call and request by name the very loan program they want to put you in, the desired “30 Year fixed” What a marketing ploy.
Stop and think about it for a moment. If the edges want you to borrow money for 30 years, what’s the best way to get you to do that? They convince you it is the best program by offering the best interest rates. But if it is the best loan program for the edges, how can it be the best loan for you? however every time the rates go down a half point, and the edges run their television ads you can not wait to get down to the bank and reset your 30 year loan you have been in for 3 years and start over again on another 30 year loan.
Before you get too upset with your banker or mortgage broker I should tell you that they do not know what is going on either. They think just like you do, that they are helping you out. The average loan officer at a bank or mortgage company has been in the business for less than 2 years. They don’t already have time to figure out the loan course of action themselves before they are out of the industry and doing something different.
Now, before you start getting upset with me, I should tell you I am not specifically saying that a 30 year fixed is not the right loan for you, I do not know your financial situation. It may be the perfect loan for your situation. The real question you should be asking yourself is who is helping you manage your greatest asset? If you think it’s your house your wrong, it’s your mortgage! Are you getting advice from someone who has only been in the business for less than 2 years and nevertheless renting an apartment because they can not manage their own finances well enough to buy a house? Are you so confident that you know exactly what loan program is right for you that you just go with the lowest bidder? (Here’s a little secret, if you have ever heard a horror story about a loan or home buy, they probably went with the lowest bidder!)
Now for the good news, there are experts in the field that can help you manage your mortgage and use it as a debt elimination, credit building, and wealth generating tool. However, you will never find these experts by opening your phone book dialing mortgage companies and asking “What’s your interest rate?” Do you think that the leading experts in the industry sit around taking these types of calls? I can assure you they do not. The person on phone duty is the newest and least experienced person that they have. Is that who you want to advise you on your greatest asset?