What’s the best type of mortgage to obtain? What should you avoid? What are your mortgage options, exactly?
We find that clients have certain assumptions about mortgages. “The lowest rate mortgage is always the best option.” “Always put down 20%.” “A 15-year mortgage is better than a 30-year.”
However, these assumptions are not always correct.
Let’s examine some mortgage options through the lens of Prosperity Economics—an alternative to typical financial planning. Prosperity Economics uses certain principles of prosperity to deliver better, more reliable results than typical financial advice. (Find out more here.)
When it comes to getting a home mortgage, you don’t want buyer’s regret! After all, it is the funding mechanism tied to your home AND a financial product you may have for years or decades to come. Some common mortgage options include:
Each year, we gather with other advisors and industry leaders to “sharpen the saw,” so to speak, at the Summit for Prosperity Economics Advisors. It’s a wonderful week to stop working in businesses and to instead work ON our businesses—and ourselves.
It’s a good week to gain some perspective from another vantage point. (We’ve always held the event on a mountainside of some kind, in Arizona or Utah—so we mean “Summit” quite literally!) I always leave with a renewed sense of what matters and what works—in business and in life. Today, I wanted to share some “big picture” wisdom for a successful, rich life with you.
These are “rules”—or lessons—I’ve learned and tested over some years now. They may be rules you can use, or rules you already know, in which case, I invite you to share them with others.
“Saving money is something we can control. It may not be easy…but saving money is possible.”
— Kim D. H. Butler
Many Americans struggle with their saving habits. After all, it is a natural human tendency to spend more as we earn more. Unfortunately, this approach puts us in a perpetual holding pattern, running ever faster to keep from backsliding financially.
Saving, on the other hand, is a progressive action. It is a habit that requires self-discipline to start, but one that pays long-term dividends.
The wealthiest people are often good at earning high incomes and investing money successfully. They understand how to use leverage, manage risk, diversify, and take advantage of tax code incentives. But they also understand the importance of putting first things first. And the foundation of wealth is the habit of saving.
“Don’t put your money into something that doesn’t give you something in return.”
—Kim Butler and Jimmy Vreeland, Busting the Real Estate Investing Lies
A Preview of our New Book!
If you’re not investing in real estate, you’re probably slowing your journey to financial independence. Over the last two centuries, around 90 percent of the world’s millionaires have been created by investing in real estate, according to the TheCollegeInvestor.com. David Greene, a Forbes contributor and host of the Bigger Pockets podcast, contends that real estate builds wealth more consistently than any other asset class. Appreciation, depreciation, leverage and inflation—they all work to the real estate investor’s advantage! Yet unfortunately, real estate investing lies sabotage the success of many — or keep them out of the game altogether!
“Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples.”
— George Burns
The Early Retirement Movement
There is a growing community of people dedicated to quitting their jobs at increasingly younger ages. It goes by the FIRE acronym (financial independence, retire early) and it’s gaining significant traction amongst (typically) high-earning young adults who envision a different, more flexible lifestyle.
Who is the typical FIRE follower? Many come from the tech world, engineering, or other well-paying industries. (It’s hard to save aggressively on a less-than median wage.) Largely male in the early years of the movement, now there are plenty of women and families in the movement. Many retire in their 30’s or 40’s, but some as early as their late 20’s. Some are entrepreneurial, some are not. Some like to travel, others are homebodies. Most are attracted to simple living and time freedom.
The “rules” behind FIRE are simple, as is the basic math used by the community: