Have you ever heard of the term “mortgage burning?” If you haven’t, ask your parents or grandparents as I’m sure they have.
Mortgage burning ceremonies are really a thing of the past and I want to bring them back. Banks used to send out the actual mortgage when a mortgage loan was paid off. Many people actually burned their mortgage in a sign of financial freedom. They no longer had the largest debt hanging over their heads. Some might even be jealous to see this happen.
We have become a society of change. Our parents or grandparents may have lived in only one house their whole lives, while today, people have owned many. That by itself isn’t a good excuse to eliminate the grand ceremony of burning your mortgage!
So many of you are asking, "Where do I start?" Well, the first thing I would recommend is to consider doing a 15 year mortgage instead of a 30 year mortgage. This idea isn’t popular with many in the real estate business, because they will tell you that you can buy more house with a 30 year mortgage. The downside of this is that customers will be paying for it twice as long. The truth is that you may be able to afford a slightly higher priced home with a 30 year mortgage, but the difference is not significant. Here is an example of the unbelievable savings comparing a 30 year to a 15 year mortgage on a $150,000 loan:
(After 15 years you could take the house payment money and put it towards college education or retirement.)
Now, I realize that we're in the business of earning interest on loans you secure, but I can also assure you that our number 1 fundamental is to always do what’s best for you, our customers. I would be honored to attend your mortgage burning ceremony! Just let me know when it is.
NOTE: The example above is for informational purposes only, and uses estimated APRs.
Scott Huedepohl is the President of Community State Bank, and has been a community banker for over 30 years.