**Equity inside a home can’t be out of the home earning compound interest**

If you pay off your mortgage faster, the total interest does decrease, but it will hurt you financially! Every dollar in a home COSTS interest which is called an **opportunity cost**. Since long-term earnings, with no losses after fees and taxes, on alternative holding tanks for home equity are 5–6%, what it costs you to put money INTO a home is the loss of a compound 5–6% per year. **AND YOU CANNOT DEDUCT THAT LOSS ON TAXES**.

When money is put into a home you lose 5–6% and save yourself the cost of a mortgage which today is around 4%. But, paying that 4% offers a tax deduction for most people. So you pay $4,000 per year in interest for every $100,000 you owe and can then deduct that $4,000 from your annual income before you pay taxes.

That saves you, let’s say $1,000 in taxes. So your net cost is $3,000 for each $100,000 you are “renting”. Paying more towards a mortgage is saying * “I’ll give up earning 5% per year so that I don’t have to pay 3%”*.

**Let’s use $100,000 to prove the point**

If you take $100,000 out of alternative storing places for home equity, you lose $5,000 a year and save $3,000. You lose $2,000 per year. Good move? N0.

Turn it around. Look at it the way banks and insurance companies do with Arbitrage *(they are in business to get INTO debt and pay commissions to people to get them into as much debt as possible because they understand what I am teaching you here)*.

If you invest $3,000, to rent someone’s $100,000 so it can earn $5,000, then you invested that $3000 for a total gain of $2,000 (5k-3k-2k profit). Was that a good return? Well, $2,000 profit divided by a $3,000 investment = 67% rate of return. I think that’s pretty good.

The only reason anyone talks down about this strategy is professional ignorance. They have either not taken the time to study Arbitrage or they have not take the time to learn how to use Indexed Universal Life Insurance as a holding tank for home equity.

**Ignore the ignorant under-educated loud mouths, screaming out how they have not done their homework, and learn for yourself!**

Once you know where to make 5–6%, without the risks of the stock market, you’ll think very differently about home equity.

There are ways to learn for yourself.. Listen to the Renovating Retirement Podcast to learn how to have the best retirement possible, so you don’t succumb to financial plans that aren’t right for you and your family!

Read my 27-page book on the topic here: *Two Ways to be Debt Free – Mortgage Planning: Part 1*