Focus on MORE than Just the Interst % Rate

Look, here is a million dollar plus mistake that is happening all across our country on a DAILY basis. I'll even say HOURLY basis. Home buyers (Not home 'owners'...don't make your payment for 3 months and then let's see who really owns the home) all over America get duped into the dream of a LOWER INTEREST rate and then go refinance their home. We grow up being told to "chase the rate" and as we trap ourselves into this refinance cycle over and over we wonder when we get to age 65 how it is possible to still have a 30 year mortgage.

Hmmmm...I wonder.

I have a lot of acquaintances in the mortgage industry and I really despise the mortgage industry because of their tactics. If you sit down with a loan officer, you are usually going to be asking them two specific questions:

1. What's my rate
2. What's my payment

Your loan officer is very glad you asked them those two specific questions because they make the most sense for them. They know if you can be satisfied with those two answers, you'll move ahead blindfoldedly. In reality, those two things don't do much for your overall financial picture. Instead, try asking these two:

1. What will the total cost of my loan be?
2. When will I be completely paid off?

Because at the end of the day, isn't that really why you want a lower rate? To pay less? Well, if you continue to refinance time and time again, you always push back the day you pay off your mortgage. We've done this so much in our society that I have had people say to me, "We'll always be in debt" and they seem to think this is an acceptable way to live.

You want to know one reason why you might be broke...that is one of the reasons. So do yourself a favor, if you are refinancing, remember that you might get a .25% lower rate, but you are restarting the clock. You actually just cost yourself more money and you definitely pushed back your retirement because of it as well.

Let's get S.M.A.R.T. about our $$ shall we?

Here's an exercise for you to illustrate this point:

Grab a little kid and ask him/her to play a game with you. Pull out from one pocket a dollar bill. From the other pocket pull out a piece of paper that has the percent (%) symbol on it. Ask that little kid which one he/she wants.

What do you think he'll/she'll reach for? The dollar...EVERY TIME. Isn't it funny that kids get this simple concept so early in life, and as adults our view point can really get messed up?

K.I.S.S.