What if I were to tell you that almost everything you have been told about what to do with your home has been absolutely wrong and that one of worst ways to build wealth is through your home? And what if I further went on to show you that anyone who perpetuates this myth probably is not your best source for accurate financial information?

Most of you right now are looking at byline a couple of times to see if this article is REALLY being written by a mortgage person. Some of you have taken this as final, unequivocal proof that all mortgage people really do sit around a big table of tea cups wearing hats with fractions on them! No you are not in Wonderland but if you keep reading you might find many of you have been for a long time now.

One of buzzwords or catch phrases floating around financial circles is "wealth creation." This has gained prominence due to ability of planner or agent to broaden their focus on overall wealth with their clients instead of just return on a particular investment. While a holistic approach is a very good one, what wealth creation strategies often lack are a defined strategy for accomplishing well, wealth creation! These plans often fail or vastly under perform because they don't properly account for one of biggest parts of wealth picture and that's home!

WHAT DID HE SAY?

Now that's not a typo and I didn't contradict myself from first paragraph. You see, most people believe their home is something completely separate from rest of their financial planning. It's this sacred cow that's over in green grass munching away while everything else in their financial life is trying to figure out how to grow without food it needs. The sooner people realize that EVERYTHING they do is an investment decision , better off they will be. The implication of your decision is not simply what you obtain by your action but what opportunity you give up.

So, back to wealth creation and mortgage planning. In borrowing some thoughts from a great financial partner of mine, Brent Gilmore, we can summarize what we typically look for as far as characteristics of a good investment as:

• something that earns us a good return based on our risk

• is liquid if we need it

• is not subject to additional restriction to access it once we have it

• is not at risk of loss.

The reality is your home is absolutely not definition of a good investment. The reasons are fairly clear if we break them down. What if I told you MAXIMUM return you could make on purchase of your home was 0%?

Here's where we hit rabbit hole.

First we must explain difference between return of investment and return on investment. Return OF investment is simply getting back money that you put in. Return ON investment is difference between end value of your investment and amount you invested.

Whether you pay cash for your home or pay nothing down, your home mortgage will be worth exact same in 1 year, 5 years, 10 years or 30 years. It is true that if values keep going up you will make a positive return ON investment but that is independent of return OF your investment. Even that fact has some doubt clouding it, but that's another article.

PAGING CHICKEN LITTLE

Now let's step back from all of sky is falling stuff and clear some things up. Your house may well continue to appreciate in value, especially in a strong local economy like Columbus . But appreciation as I showed you above has absolutely nothing to do with return OF capital . Remember that if you bought a $300,000 house today, paid cash for it and turned around in 1 year and sold it for $350,000 you would have experienced same appreciation as if you had put $0 down to buy house. Your $300,000 was invested in an asset that yielded 0% during its use.

The key to this is that when you pay your mortgage you "choose" to invest money in your home instead of in other options that could return you more . Lets Consider consequences of not being able to pay that mortgage one day:

• Will bank give you back money you paid on mortgage and all of appreciation when they sell your house in foreclosure?

• Will they lend you more to help you get back on your feet at terms as good or better then you have now?

• And will they do it without asking you to prove your ability to repay new loan when you couldn't pay old one?

Sounds silly, but this is what happens all time.

Now wait, you say, I have a paper that shows me that if I pay twice per month I will pay off my mortgage 8 years sooner and save $84,000 in interest! You are right, you will. BUT is it a good choice if that money that you borrowed at 4% (After factoring in tax savings on interest) could be returning you more, guaranteed , elsewhere? Consider other factors as well:

• Are you making those payments and carrying "bad" debt like credit cards at 15%?

• Are you finding it hard to put in enough in your 401k to even get match your employer offers?

1. First and foremost, you should figure out if you even want to continue using your current credit card company. Are you pleased with overall service that you are receiving? Do you like their benefits? If answer is yes then you can proceed. If not, you should stop reading this article and start looking for a better company.

2. Second, you should evaluate your paying history and make sure that it is positive before you call to negotiate. If it is positive then you have power and if it isn’t then you’ll be negotiating from a position of weakness and that might not be good. Instead, you should wait until it is more positive before you call them to negotiate rates.

3. Third, if you have a good history then remember this when you call. In essence, you’ll have extremely high negotiating power. The company needs your business in order to be successful and with clients they lose big time. Therefore, you should always display this “take them or leave them attitude” while conducting your negotiations.