Mortgages: Part 1

Hosts: John and David Thompson

Episode Summary: In this episode of SMPL Money, John and David discuss the first three reasons from Ric Edelman's article, "11 Great Reasons to Carry a Big Long Mortgage." They provide insights from their generational perspectives on why carrying a mortgage can be beneficial, challenging conventional wisdom that encourages paying off mortgages quickly.

What You'll Learn:

• Reason 1: Your mortgage doesn't affect the value of your home. The appreciation of your home is determined by the market, not by the presence or size of a mortgage.
• Reason 2: A mortgage doesn't prevent you from building equity in your home. Equity is primarily built through home appreciation and paying down the mortgage with your own funds.
• Reason 3: A mortgage is cheap money. Mortgages typically have low interest rates, especially fixed-rate mortgages, which can be advantageous in the long term due to inflation and increasing earning potential.

Timestamps:

• [00:00] Introduction to the episode and hosts
• [01:00] Overview of Ric Edelman’s article and its relevance
• [02:00] Discussion on why people generally avoid mortgages
• [03:00] Reason 1: Your mortgage doesn't affect the value of your home
• [04:00] How home appreciation works independent of the mortgage
• [05:00] Reason 2: A mortgage doesn't stop you from building equity
• [07:00] The concept of equity and its relationship with home value
• [08:00] Reason 3: A mortgage is cheap money
• [10:00] The benefits of long-term fixed-rate mortgages
• [12:00] The concept of liability asset gap and financial arbitrage
• [14:00] Importance of understanding opportunity cost in financial decisions
• [16:00] Wrap-up and preview of the next episode

Resources Mentioned:

• 11 Great Reasons to Carry a Big Long Mortgage by Ric Edelman
• Books by Ric Edelman: "The Truth About Money", "Ordinary People, Extraordinary Wealth"

Connect with Us: Reach out to John and David with your questions or feedback. SMPL Mortgage

Follow us on social media for updates and more insights. @smplmortgage

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