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 If you enjoyed this episode, please like, share, and subscribe to SMPL Money for more insightful discussions. Stay tuned for our next episode where we continue to unravel the complexities of finance in our lives.