*Below is to show an example in a particular situation. In real life, you may have to consider your unique case and consult with an appropriate professional.
In the past three blogs, I wrote about why it may be better not to pay off your mortgage. First of I talked about getting a better cash-flow by NOT paying off your mortgage but buy more properties. The second blog talked about extra appreciation you get by buying multiple properties. The third blog, I talked about this hidden benefit called “depreciation.” This blog will talk about why the mortgage payment will get lower year after year on average if you have a fixed rate mortgage.
Have you noticed that the house price keeps going up in general? Or new cars? Or the latest cell phones? While some items went down in price, like computer monitors, the price of most of the things keeps going up. This is called inflation, and while price may fracture short term, I think you would agree that in the long-run, most of the items will go up in price.
So what does it mean when it comes to the mortgage? When inflation happens, the rent will go up also. But the mortgage payment stays the same. Paying $800 mortgage when the rent is only $1,000 may not seem like a good cash-flow, but what happens when the rent goes up to $1,100, $1,200 or even to $1,500? Now the cash-flow looks a lot better.
If you are struggling with the cash flow now, just know that as the rent goes up, it will feel like your payment is going down.
