2008: The Year of the Appropriate Mortgage

As we start this new year, resolutions will be made while only some will be achieved and upheld. Some will tackle personal goals, while some will address physical aspirations. Most Americans may choose to address financial resolutions in hopes of furthering financial success and growth.

From my humble experience, I have come to realize a world of neglect in an abundance of Americans' mortgage planning. You see, I encounter homeowners, investors, and clients each and every single day. As I review each case, and sometimes do preliminary underwriting on some, I realize that most do not realize the importance of a mortgage in the overall schematics of financial success and overall wealth accumulation.

For most Americans, a mortgage is seen as a burden, a debt that must simply be paid every month and eventually, after a good 30 years, it will be lifted off the balance books. However, the unfortunate occurrence I have noticed is that while most Americans religiously focus on working long nights and full weeks simply to pay the hefty mortgage payment, they forget to simply invest in themselves. Most simply invest into the bank collecting the payment.

You see, our banking system is one of the largest, if not THE largest, businesses in this country--if not the world. Banks have mastered the art of (first) lending, then collecting, and then investing what they are collecting, which will yield in accumulating interest and wealth. Banks are one of most profitable platforms in our economy. Most wonder why. One example, Bank A lends at 6.5%, collects this payment, utilizes compounded interest, all the while invests that same 6.5% to double, if not triple, if not quadruple, etc. to yield lots and lots of profits. How else can players such as Citi and B of A write of billions in bad debt, while still being profitable businesses?