Mortgage Strategies: Accelerate Your Financial Growth

Building wealth through strategic mortgage management can help you achieve long-term financial wellness. Your mortgage can serve as a tool that, when used correctly, amplifies wealth accumulation and accelerates financial independence. Here, we outline actionable strategies you can use to maximize the wealth-building potential of your mortgage.

Leverage Your Existing Mortgage

Enjoy the Potential Appreciation of the Property Value

Homeowners may continue to build wealth through the potential appreciation of the property value. Appreciation occurs when the property value increases, thus increasing the buyer’s equity in the home. Appreciation can be due to a variety of factors such as location, market demand and economic conditions. Depending on the rate of appreciation, the return on investment can outpace the interest on traditional savings accounts.

Accelerate Equity Through Bi-weekly Payments

Submitting a mortgage payment on a bi-weekly basis, instead of once a month, accelerates the rate at which the homeowner’s equity is built. Instead of making one payment in a month, bi-weekly payments split the monthly sum into multiple payments made every other week. Bi-weekly payments can decrease the amount paid toward interest and pay off the total amount of the loan faster.

Utilize the Mortgage Interest Statement

Some borrowers are eligible for a mortgage interest deduction that reduces their taxable income. The Mortgage Interest Statement, or Form 1098, can be used to report how much mortgage interest has been paid to the Internal Revenue Service (IRS). The form enables you to see how much total interest was paid for the year, which a homeowner may then be able to deduct from their taxes. Homeowners should consult with a tax professional on how to do this.

Investment Property Advantages

Some buyers may consider taking out another mortgage to buy an additional property. A second property can be rented out to tenants, with their rent payments serving as passive income. Each time rent is paid, that money can be used to fuel other investments or pay off the mortgage. Landlords also increase their wealth through the appreciation of the property.

Alternative Financial Growth Strategies

Short-term Strategic Planning

When planning to buy or refinance*, borrowers have the option of an interest-only loan. By taking out an interest-only loan, only the interest on the loan for a specific timeframe is paid, rather than both principal and interest. Interest-only loans will have a lower payment during the interest-only period, empowering borrowers to save.

Adjustable-Rate Mortgages (ARM) for Potential Cost Savings

An adjustable-rate mortgage is a loan type that borrowers can choose when purchasing or refinancing. ARMs have a period of time in which the interest rate is fixed. After this, the interest rate fluctuates. Due to the structure, ARMs have a lower interest rate at the start of the loan, freeing up more cash for strategic moves.

Strategic Mortgage Management Can Build Financial Wellness

Homeownership is a powerful tool, providing many opportunities to build wealth and reach new financial goals. By utilizing strategies such as bi-weekly payments and even refinancing, buyers may be able to increase their net worth. Doing so lays the groundwork for lifelong financial independence and growth.

*By refinancing an existing loan, the total finance charges may be higher over the life of the loan. We may transfer the escrow account balance from the current loan to the new loan. If the current escrow amount is insufficient due to changes in taxes or insurance, we may require additional money when closing on the new loan