Read on to discover how a typical couple in Massachusetts can add over a million dollars in assets without increasing their monthly outflow of cash, and without adding additional risk.

John and Michele - Mid 30’s
John and Michele are both 35 years old and hope to retire at age 65. Their current home is worth $500,000 today and is likely to appreciate by a conservative rate of 5% per year. At that rate, their home will be worth $2,233,872 in 30 years, which is when they hope to retire. Their marginal tax bracket is 33% between the Federal and State income taxes.

Their current mortgage plan:
They have a 30-year fixed rate mortgage at 6.00% on a $250,000 mortgage with a payment of $1,529.

Additionally they have consumer debt between credit cards and auto loans of $22,612 that they pay another $1,067 for monthly. During the first 5 years of the mortgage Uncle Sam pays $413 a month of their mortgage payment with the current mortgage interest deduction.

Therefore, the net fixed payment during the first five years of this 30-year mortgage is $1,116. But when we look out into the future, at the last 5 years of the 30 year mortgage, all things being equal, Uncle Sam will only contribute $16 a month with a net payment of $1,513. Under their current plan John and Michele are debt free in 30 years when they retire. And think they have a good plan.

A better plan with Viking Mortgage:
Viking Proposes that John and Michele take a new mortgage of $400,000 with a new monthly payment of $2,000.

In this case, if allowed, Uncle Sam kicks-in $660 for a net payment of $1,340, an increase of only $224 per month. With the cash proceeds from the refinance we are assuming they are recouping $50,000 in capital improvements completed on the home and they are wiping out all the consumer debt. Now they are saving on a monthly cash flow basis of $843 and have $127,388 that can be invested in a tax free side fund that is safer than leaving it in dead equity (as they were doing).

The results:
If the side fund grows at only 6% for thirty years it will be worth $1,682,045. If John and Michele still have the $400,000 mortgage, then they have increased their net worth by $1,282,045 by only refinancing once and without spending an extra nickel form their monthly cash flow.

They actually have $843 extra each month to spend or save, and they’ve added $1,282 million to their net worth!

We can help you do this as well.

Contact us today to schedule your free consultation.