When the balloon hits, he'll have enough to cover most of the loan, he figures. Or should I say he hopes. Today, his returns are nowhere near 10 percent. That's one problem with this strategy. Discipline is the other.
Many people intend to invest the difference.
Then the car needs a new transmission or the house a new roof, and it never happens. When Levin's clients refinance, he wisely sets up two automatic withdrawal plans. The first pays the mortgage. The second invests the savings. Many of us haven't factored continuing mortgage payments into our financial projections for retirement.