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11	How Most Prioritize Payments
12	The American Dream & Why We Do What We Do Part of the American icon for generations has been to “Own Our Own Home” Remember what our parents and grandparents taught us? Get an education … find a good job … buy a house … and pay it off as soon as you can! Sounds great … doesn’t it?
13	How Those Generations Lived
14	How We Live Today We change jobs 5 to 7 times, or more… We move 4 to 6 times, or more… We will never have a “pension”. We haven’t saved any money. We have a lot of credit card debt. We refinance more frequently, often consolidating debts. The average life of a mortgage is 5 years!
15	Managing Your Loans With Old Concepts? Single payment of principal and interest. Sending extra payments to pay principal down faster, reducing your greatest tax write off. Your lender invests the principal amount of the payment for their benefit. And require you to qualify to have access to your equity. What is your return on your equity?
16	"The customer determines the amount..." The customer determines the amount and length of time for monthly contributions to continue. The customer can pay more than the minimum monthly contributions, but not less. If the customer attempts to pay less, the financial institution keeps all the previous contributions. The money deposited in the account is not safe from loss of principal. Each contribution made to the account results in less safety The money in the account is not liquid The money in the account earns a 0% rate of return. The customer’s income tax liability increases with each contribution. When the plan is fully funded, there is no income paid out.
17	"The customer determines the amount..." The customer determines the amount and length of time for monthly contributions to continue. The customer can pay more than the minimum monthly contributions, but not less. If the customer attempts to pay less, the financial institution keeps all the previous contributions. The money deposited in the account is not safe from loss or principal. Each contribution made to the account results in less safety The money in the account is not liquid The money in the account earns a 0% rate of return. The customer’s income tax liability increases with each contribution. When the plan is fully funded, there is no income paid out.
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22	Equity in Your Home is
23	How Much Should I Pay? Client A (Old Concept) Current value of home $250,000 Down Payment $150,000 They were taught “Pay Off Your House as Soon as You Can.” Not only did they make their payments, but they made extra payments. Client B (New Concept) Current value of home $250,000 Down Payment $25,000 They were taught “Pay As Little Into Your House As Possible.” Interest only mortgage
24	Both Houses Appreciate Next Year to $267,500 (5% increase) Client A Return on his $150,000 = 0% Client B Return on his $25,000 = 0%
25	Optimizing Your Asset Start using the dollars in your traditional mortgage payment to build and save for your financial future!
26	Interest Only Mortgage An interest only mortgage allows you to pay interest only every month on the borrowed funds. Pay only the interest due, keep the principal portion instead of paying it to the lender, thereby creating excess cash flow that is yours to invest. Place your principal portion of your mortgage in a safe and accessible place that provides a good rate of return, preferably in a tax favored environment, instead of the walls of your home.
27	Payment Comparison Of Your Options Monthly Payments - $250,000 Mortgage Compare the 30-year Fixed to the Interest Payment at 4.375%. That is a difference of $587 per month or 1/3 ^rd of your payment. A potential savings of over $7,044 during the first year alone. Actual payments will be determined by the interest rate and loan amount selected. The payment example above does not reflect the cost of property taxes, property insurance, Private Mortgage Insurance or Homeowners Association Fees.
28	The “Interest Only” Five-Year Summary $250,000 Mortgage * Actual cash flow savings will depend upon actual interest rates of the loan.
29	Recapturing Opportunity Cost Putting Your Savings to Work This example uses hypothetical returns which are provided for illustration purposes only. Programs, interest rates and terms may vary by lender and State and are subject to change without notice. Rates of return do not represent the actual return of any product or investment. Past performance is no guarantee of future results.
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35	Which Would Be the Wiser? Client A Mortgage Amount $250,000 Payment @ 6.00% - $1,498 principal & Interest over 5 years = $89,880 Has $17,364 in principal in the walls of your home earning nothing. Client B Mortgage Amount $250,000 Payment @ 4.375% - $911 Interest payments over 5 years = $54,660 Has $43,130 in a side fund earning a rate of return from the difference on the $587.
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