Results After Just 5 years

Brother "A" Believes in "the Old Way" paying off the mortgage as soon as possible   Brother "B" Believes in "the New Way" carrying a big, long mortgage and never paying it off Received $12,745 in tax savings2,4,5 Has $0 in savings and investments Received $18,620 in tax savings1,2,3,4,5 Has $91,444 in savings and investments2,3,4,5 What if both brothers suddenly lose their jobs? Has no savings to get through the crisis Can't get a loan - even though he has $75,915 more in equity than his brother - because he has no job Must sell his home or face foreclosure because he can't make payments At this point, it's a fire sale, so he must sell at a discount, then pay real estate commissions (6-7%) Has $91,444 in savings to tide him over2,3,4,5 Doesn't need a loan Can easily make his mortgage payment even if he's unemployed for years Has no reason to panic since he's still in control - remember ... Cash is King! How ironic: Brother "A", who never wanted a mortgage in the first place, is now in financial jeopardy because he was trying to get rid of his loan too quickly! These hypothetical examples are for illustrative purposes only. Plans vary based on the needs and wants of the customer. Illustrated interest rates are based upon the interest rates compiled by Fannie Mae for January 2008. Private mortgage insurance would likely be required. However, this cost is not included in the examples above for illustrative purposes. 1. This example is based on a Fannie Mae Interest First loan. Interest only for 10 years, then the first loan converts to a 20-year amortizing loan on the 10th anniversary with a monthly payment of $1,375. 2. Assumes combined federal/state income tax rate of 32%. Assumes that interest paid is fully deductible. 3. Assumes 8% rate of return. Rate of return may vary based on type of investment. 4. The interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for federal income tax purpose. 5. The consumer should consult a tax advisor for further information about the deductibility of interest and charges. 6. Monthly payment amount does not include homeowner's insurance or property taxes. This is not a solicitation or offer for the purchase of any product. Payments do not include amounts for taxes, insurance or any other products. Rates could change or be unavailable at the time of commitment or closing.