Look in your wallet. The cash you see is not being invested and is not making you more money. That dollar in pocket change will buy you a soda, but soon it’s gone and that indicates a temporary value because you will get thirsty again by tomorrow. Each month you pay your house note, that money isn’t working to make you more money, but it is giving you value. Value is something that will increase. Paying your house note gives you value because your house, as a general rule, will go up in value. But, does it go up at the same rate as the interest you pay? If it does not, is that a problem?

On the surface, it seems that it is the smart thing to do to pay off that house mortgage as quickly as possible. It also seems smart to either get a 15 year loan or to make double payments with the idea to reduce the amount of interest you are paying as well as paying off the mortgage sooner with the added benefit of more equity, faster.

Is that a good and valuable use of your income? Most folks would say yes, no question.

If we dig a bit deeper and look at the situation from a different angle, we can see another dimension to this value question. Let’s say that you have a great job and great credit. You get a fifteen year mortgage loan for a home making a large down payment. Your monthly notes are rather high, but you were prepared for it. The large down payment, and the shorter term mortgage drastically reduces your interest payments. Great! But, wait. What kind of tax savings do you get through out the term of the loan? Considering the fact that interest in mortgage loans is tax deductible, you have not gotten much of a tax break. So what? You own your home after 15 years, right?

What if you lose your job? Become injured? What if you are 50 and fifteen years away from retirement? Is it a good use of your money then?

Take half of that money you were going to use for a down payment and invest it in real estate property. Get a 30 year loan, instead of a 15 year loan. The amount of interest you pay goes up, yes, but you get a tax deduction on it. It takes self-discipline for this to work, but you can take the money you save on the lower monthly notes and invest this, too. At the end of 15 years, you not only have your tax savings, but you also have the savings and investments that are at fair market value more than what you owe on the balance of your home mortgage.

What most people do not realize is that equity in your home is not earning you a return on your investment. Real Estate investment properties yield a greater return than do most other forms of investments in the long term. When your investment pays for itself through rental income, that will equal greater leverage and greater value for your dollar.

About the Author:

Investment Property Specialist - Alex Anderson Connects Real Estate Investors With High-Quality Investment Properties. Get A Free Copy Of, "The Investor's Rental Guide" at:www.GreatInvestmentProperty.com

Source: www.isnare.com