The Second Step to Borrowing SMART

2nd step

Once you are clear on the First step to making SMART borrowing decisions when it comes to financing your home, it is time to learn the second step:  PAYMENT.

Put as a financial planning question, it means “How do I repay my new loan?”

As a homeowner, this can mean a few different things:

  • Do I repay my new loan over 30 years or 15 years?
  • Do I make extra payments each month to pay it down faster?

The answer to this question is unique to every individual who is planning to buy, and own a home, utilizing a mortgage.  Some of the factors at play are your current cash flow, how you get paid at work, job security, what other financial goals and obligations you have, and ultimately your long-term goals with the house.

If you have plenty of extra cash left over at the end of each month, and all of your other “buckets” are full or being adequately filled (link to blog How to Prioritize Your Cash Flow), then choosing a shorter-term mortgage may make sense for you, such as a 10, 15, 20, or even a 25-year mortgage.

On the other hand, if you have concerns about your job, or your income fluctuates throughout the course of the year due to commissions or bonuses, then a 30-year mortgage most likely is the safest.  Besides, you can always pay extra on a 30-year mortgage when able, and then enjoy the minimum payments when times get tougher.

This is why we provide the education, resources, and planning tools needed to help each individual client make the SMARTEST decision possible as it relates to their personal situation and goals.

The real key here is to not compartmentalize this decision.  Meaning, how you choose to repay your mortgage impacts virtually every other aspect of your finances.  When you choose to send an extra $500 each month to your mortgage servicer, remember that that same $500 can never be used for paying off a credit card or investing for your children’s college education.

Bonus:  For a free copy of my book, Borrow SMART, Retire Rich, the first 10 people who like our Facebook page, and then share the link to this article on their Facebook page mentioning us, will enjoy a free book mailed to them!  Spread the education!

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By Trevor Hammond


About Trevor Hammond

As a veteran of the mortgage industry, Trevor Hammond is the co-author of "Borrow Smart, Retire Rich," a Certified Mortgage Adviser and a founding Faculty Member and Contributor to the National Institute of Financial Education ( And he has provided thousands of homeowners with the clarity and confidence to make smarter decisions when it comes to their mortgages and money. In 2013 he launched an entirely new kind of mortgage company: Aspire Mortgage Group, which is committed to educating and empowering homeowners to increase savings, eliminate bad debt, and safely increase net worth. The specialized group of mortgage professionals at Aspire Mortgage Group have redefined what homeowners should expect from a mortgage company. To learn more about Trevor Hammond and our team of mortgage advisors please visit our website at or email Trevor directly: Aspire Mortgage is a Sierra Pacific Mortgage Partner.
This entry was posted in Blind Spot 1: Developing a Plan, Blind Spot 2: Increasing Fiscal Literacy, Uncategorized. Bookmark the permalink.

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