There's no denying the fact that real estate is a great long-term investment...if you look at it with a long-term perspective, that is. You can't really go wrong when it comes to investing in housing - but the name of the game isn't to repeatedly borrow against an asset...the name of the game is to actually OWN it...or at least most of it so you can leverage your way to wealth!
Unfortunately, homeowners often think of their investment as a giant ATM machine, and plenty of them are eager to cash out every chance they get for as much as they possibly can. Some people cash-out to play...perhaps a vacation or to fund a wedding - but people cash- out to pay off other debt with higher interest rates; and they do so without blinking an eye about beginning the 30-year debt cycle all over again. Bye-bye, equity. So much for that long term investment perspective - it doesn't take much to go from asset to liability with this strategy! Lather, rinse, repeat.
Today's interest rates are very tempting, especially in places where the real estate market is strong and climbing. It's the perfect storm! A little equity...a low-interest rate...and we start the ball rolling all over again. We're living as if we'll live forever and we're spending like it too. Looking at your property as a giant ATM machine will catch up with you sooner or later and it will be THE #1 REASON you don't acquire wealth in your lifetime. Lather, rinse, repeat.
The National Association of Realtors reports that (on average) owners will purchase and/or refinance every 3.75 years and the average age of homebuyers today is 47. If you remove first-time homebuyers from the equation, the average age of homebuyers today is 56. Without a serious debt elimination plan, homebuyers will leave nothing but debt behind for the heirs...all because they failed to look at their real estate investment with a long-term perspective. Lather, rinse, repeat.
Just about anybody can build wealth if they understand the concepts of wealth building. The first step is to wrap your head around compound interest. Einstein said "compound interest is the 8th wonder of the world. Those who understand it, earn it. Those who don't, pay it." Did you know that your BIGGEST expense is not your rent or mortgage? Your BIGGEST expense is interest...compound interest. You can get 100% debt free in a fraction of the time IF YOU address compound interest and you begin to work your money the way the banks work theirs yours!
It's much easier than you might be thinking and the results are more astounding than you can imagine. It's not magic...it's just math....really complicated mathematical algorithms...but YOU don't have to know how to do them to be able to have them work for you!
See for your what your financial picture looks like when you address your BIGGEST expense...compound interest. No sensitive info required! Just use the sliding scale calculator (below) to get a rough idea of how fast you could pay down/pay off your debt...including your mortgage. After that, take 2 aspirin and call me in the morning...I'll have you on track to build wealth faster than you can say "amen."