Lending Company Puts Forth A New Philosophy

Word Count:
680

Summary:
An interesting concept is being put forward by a company called Global Equity Lending which,
according to them,is rooted in the fact that building a secure financial future is more difficult than
ever.The rules are changing and perhaps the old practices need to be revamped.GEL calls its new
phil


Keywords:
mortgage loans,home loans,loans,mortgage,lending,h


Article Body:
An interesting concept is being put forward by a company called Global Equity Lending which,
according to them,is rooted in the fact that building a secure financial future is more difficult than
ever.The rules are changing and perhaps the old practices need to be revamped.GEL calls its new
philosophy, "Harnessing The Power of Your Mortgage" 
     
     In 2004,credit card debt accounted for over half of the $2.1 trillion of consumer debt in the U.S.,
quadrupling over the last decade.Today,the average American household has $9,000 of credit card 
debt at 16% interest.To pay that average off,at that interest rate would take ten years,totaling over 
$8,000 in interest when all is said and done.The financial impact of this,which is virtually unrealized 
is devastating.GEL claims to have a better way.Their thinking is that since you must borrow money 
over the coarse of life,why not borrow it as inexpensively as possible.Credit cards,auto loans,and 
personal loans are all high interest and non deductable.So why not harness the power of your 
mortgage?

     According to GEL,Americans operate under a mindset,when it comes to personal finance,that 
has been burned into our country's psyche from the days of the great depression.That philosophy 
is as such:First get the lowest rate mortgage,then,set up a bi-weekly payment plan,and,whenever 
possible send in additional payments.This way you pay off your mortgage as soon as possible.
Sound good to me,right?Well,much to my suprise,this company claims that is exactly what we 
should NOT be doing!On the contrary,their idea is one which is echoed by New York Times Best 
Selling author of "The New Rules Of Money",Rick Edelman,who says,"You should get a big,30 
year mortgage and never pay it off."Edelman and GEL put rules forth which read like this: 

1.Never send extra money to your mortgage
2.Stay away from bi-weekly plans.
3.Make the smallest payment with the biggest tax break.
4.Putting extra money toward your mortgage is like putting it under the matress.

 To back up his claim,Edelman offers five distinct reasons why you should carry a long loan:

1.Mortgages don't lower your homes value.Your home will grow in value whether or not you 
have a mortgage.
2.Your mortgage is the cheapest money you'll ever buy.Why pay credit card at 18%,when 
you can borrow at rates under 7%.
3.Your mortgage is the best way to lower your taxes.There aren't many tax breaks left.
Mortage loans,unlike credit cards and car loans are fully tax deductable.
4.You should get cash out of you house while you still can.You may find it difficult to 
get a loan if something like a loss of job comes up.
5.Mortgages become cheaper over time.Most times your payment will stay the same 
over the years while your income rises,making it easier to pay over time.


To further illustrate their beliefs,GEL presentations include a case study called,"The Tale of Two 
Brothers", where they do a financial comparison of two fictional brothers.In the story,Brother A,as 
he is called follows the "old" way of thinking,while his brother(yes,you guessed it,brother B)uses 
GEL and Edelman's theory.The results of the study find Brother B with almost a one million dollar 
advantage over Brother A.The full hypothetical can be viewed on http://turkiyespot.com/yourbighouse.com</a>, but the 
jist is that the second brother used the money he saved carrying an interest only loan,or GEL's 
famous "power option"loan to invest in other places.That,combined with the mortgage tax breaks
lead to the million dollar separation after 30 years.

     So,if you believe in this new way of thinking,and are ready to follow the model(in other words,
REALLY, put that extra money to work for you),then I believe an interest only loan or GEL's power 
option loan is the way to go,but be careful.

For more info on this new philosophy,go to http://turkiyespot.com/YourBigHouse.com</a>