June 11th, 2012 By H&H Real Estate Media in Blog.
You may carry the worry of mortgage repayment with you all day and to bed, or perhaps you keep a watchful eye out for climbing interest rates. This is not giving your mortgage your full attention.
We’re not advocating that you “think mortgage” 24-7, but that you’ll benefit from a more constructive approach toward your mortgage. Fear of math, financial terminology, or money shortages are common distractions, but examine them in full financial context, and you’ll discover they are not the huge problems you thought they were.
Since “the mortgage” represents the largest single debt most individuals, families, and small businesses incur, it’s not surprising that these thousands or even hundreds of thousands of dollars of debt weigh heavy on the mind. What’s surprising is that so few borrowers (called “mortgagors” officially) apply simple constructive strategies to this debt instead of just worrying about it.
My research and experience as a business strategist has revealed many often-ignored, counter-productive patterns in decision making and in the way we talk to ourselves – in business and in life. My point is simply that the way you communicate with yourself about your mortgage may cause you more problems that the mortgage itself.
I’ve discovered this self-communication pattern repeatedly in many aspects of business, and in the full range of financial issues that affect income-earning ventures, our futures, and real estate ownership. How individuals talk to themselves about an issue, often has more affect on whether it is considered a problem or an opportunity, than the challenge itself. That’s why “effective communication” requires consciously, consistently, and constructively making your point with yourself and others.
Let’s apply three of the effective communication principles I usually share with professionals and small business owners to “your mortgage thinking” about the business of your real estate:
1. What’s Your Goal?
That is, what do you want to accomplish regarding your mortgage – in specific terms, not “pay if off” generalities? If you think in generalities, you have no specific direction or context for your efforts and your options. To start, be specific about exactly how much you want to reduce the debt by or how much you plan to save in accumulated interest, and by when, and you’ll find yourself setting achievable, step-by-step goals.
2. What’s Your Point?
What are you telling yourself about your mortgage?
- Do you consider your mortgage as an enemy to be feared, and something that has more control over your life than you have?
- Do you consider your mortgage as a challenge to be met on terms that offer you the greatest advantage?
If you answer “yes” to both questions, you’ve missed the point. If these conflicting perspectives co-exist in your mind, you’re proven my point. Most mortgagors are ineffective mortgage managers because they are overwhelmed by mental confusion, which can be whipped into a frenzy of worry by media hype.
Those who relate to the first bullet above, may suffer from financial illiteracy, that is, lack of knowledge about mortgages and how they work, or may be reacting to external income-earning pressures, including job loss. They may also suffer under both these limiting influences. Solutions and improvements arise with knowledge. Fast-tracks may require consultation with experienced financial professionals like real estate and mortgage brokers. The more you understand about how mortgages work, the more possibilities for benefit you’ll see. Never give up, just get smarter and smarter.
If you feel you have your mortgage under control, keep learning. Mortgage success is not merely making the monthly payments, but lies in reducing the total amount of interest paid—the cost of borrowing the mortgage. What strategies do you use?
3. What’s Your Context?
In business, context – the frame of reference or relevant meaning – is often overlooked, under-estimated, or misconstrued, and so results suffer. In our personal lives, this pattern is commonly repeated, but rarely acknowledged, particularly regarding money and the lack of it. This is also true regarding the way we communicate with ourselves, particularly in assigning value or determining risk for mortgages. In business and in life, knowledge gains value and relevance in the right context. In the wrong frame, knowledge may prove useless. How do you know that you fully understand the conditions and circumstances that are relevant to your mortgage contract, repayment options, and goals?
The challenge can lie in understanding what you don’t know about your mortgage. This financial awareness is vital to asking the right questions, selecting savvy advisors, and deciding on the best strategies. For instance, in your current frame of reference regarding your mortgage, lowering monthly payments may seem more valuable than repaying the mortgage debt quickly. Increase the amortization period (the time for full debt repayment) and monthly payments are reduced, but – and it’s a big but – overtime, the total amount of interest paid increases. Yes, mortgage interest can be deducted, however, the interest paid over the life of a mortgage may total more than is recouped through tax deductions.
What seems like a simple “quick fix,” or what “everyone else is doing” may not be right for you and your mortgage when viewed from your specific context.
Have we got your attention regarding your mortgage?
by PJ Wade