Your Mortgage and How it Prevents You from becoming Debt Free

In continuning the theme of working on understanding how paying large amounts of interest will keep you in debt and prevent you from creating networth and financial freedom in your life let's look at why eliminating your mortgage is the one most important area you will need to concentrate. Many people do not know but the word Mortgage is actually a concatenation of two French words: the word Mort which means "death", and the word Gage which means "pledge". So in effect, a mortgage is a "death-pledge". When you get your 30 years mortgage you are basically making a pledge of death in paying it off.

The banks will generally structure a home loan for 30 year term. This allows them to maximise the interest payments they will receive from you. You will actually pay 50%of the interest in the first 7 to 8 years and only pay one half the principle (the amount you borrowed) in the first 21 years. Typically you are paying
1 and 1/2 the amount you borrowed in interest alone. So if you had an average loan of let's say $200,000 at 6% you would pay a total of $431,677 back to the bank, meaning you would pay $231,677 in interest. That's money you will never see again.
On this same loan you will pay $111,263 in interest the first 10 years.

Many people have given up on ever gettting rid of their mortgages and their debt. They just expect to have it for their entire lifetime. If one is to move every 7 years (the national average) to a new home they will repeat the same of paying 50% of the interest on the money they borrow over and over again. And although the property values would increase over time paying interest to the bank is like throwing money out the window. Realize the banks are in business to make money, NOT to be your friend, although you can have good relationships with the people at your bank, these people do not own the bank, the people who own the bank are in business to make money, lots of money.

Finding waying to cancel interest on your primary mortgage is probably the quickest and most efficient way of eliminating debt and getting on your way to increasing your networth. It just makes sense to not pay all that interest and start using your money in ways that will benefit you and your family and eliminate debt and increase your networth.