Don't Fall Into the Interest Rate Trap! Learn How to Avoid this Common Mistake and Save Yourself a Bundle

Ever get sucked into buying something at the grocery store just because you had a coupon

? The promise of a dollar off tricks you into believing you're "saving" money though in the end, you wind up spending more money than you would otherwise.

A lot of people get caught in a similar trap when it comes to mortgage interest rates. Everyone gets so fixated on the interest rate that they can't see all the other parts of the deal.

That's a mistake because interest rates are just one piece of the puzzle. And if you get hung up on this one little point, you'll miss out on a lot of great deals and end up spending more of your hard earned money.

To learn more about financing deals and the costliest mistakes EVERY investor must avoid, be sure to check out my Millionaire Mastery Training. For more about the next 3-day session and how you can reserve your seat before they're sold out call 877-400-7973.

In the meantime, you need to realize that as a real estate investor, chances are you're not going to get offered the lowest interest rates you see out there, anyway. Those low, low rates are for the A+ perfect people the people with no debt, sterling credit histories, long, consistent work histories and generally everything is clean as a whistle. In other words, they're for loans for people who don't need loans.

Now, if you don't fall into that category, don't worry. You're actually better off. I know lots of experienced investors myself included who could qualify for those low interest rate loans now but pass on them every time.

Why? Because the real yardstick of a mortgage deal is the monthly payment and the out-of-pocket expense. Remember, you're looking for positive monthly cash flow and the amount of money you clear each month is directly related to your mortgage payment. The interest rate is only one factor in the final payment amount and the loans with the lowest rates often have loads of fees that really add up.

The type of loans that offer the lowest rates are called conforming loans', meaning that they are traditional mortgages with 20% down and lots of documentation.

But you pay for that low interest rate with a big down payment and a lot of out of pocket charges. Typically a conforming loan requires a 20% down payment and two points at closing, not to mention a lot of documentation and verification. All of this ties up your money and take a lot of time and in the end, it just doesn't make financial sense for the investor.

Consider this: at a 7% rate, for every $1,000 you put down, you lower your monthly mortgage payment by about $6. That means if you put down $10,000 at closing, you'll only lower your payment by $60.

Is it worth it? Look at it this way: it'll take more than 13 years for that $60 a month to add up to the $10,000 you put down. But if you used that $10,000 to invest in 10 more properties, and each cleared the minimum $100 a month, you'd make over $170,000 in positive cash flow in those same 13 years.

Like I've said, folks, it's 8th grade math which is better?

The rule of thumb is always to put down as little money as possible and the best thing is to have no down payment at all. (We talk more about how to do that in the Russ Whitney Millionaire Mastery Training. Call right now 877-400-7973 to learn more about this special 3-day training program.) It just makes no sense to tie up your money like that for so little gain in your monthly payment.

So take off those interest rate blinders and focus your sights on what's really coming out of your pocket - whether it's at closing or each month when you right your mortgage payment.

Don't Fall Into the Interest Rate Trap! Learn How to Avoid this Common Mistake and Save Yourself a Bundle

By: Russ Whitney

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