> > Yeah.. you loose the tax write off... if you have to have debt, it should be in the
> > deductible form... your house... but still better not to have debt in the first
> > place.
> >
>
> WORST reason ever to have a loan...
>
> Since I paid mine off people have said this to me 'but what about the deduction?!'
> All shocked that I dont have it.
>
> Then I show them the math.
EXACTLY! I've had this same discussion with multiple people and they INSIST that I have no idea what I'm talking about.
Think about it this way. If I get a 30-year mortgage at current rates for $200,000, after thirty years, I've paid $400,000 total when you figure in the interest.
If I pay cash for a house at $200,000, after 30 years, I've still only paid $200,000. Which means I SAVED $200,000 over the other scenario.
I guess the first scenario wouldn't be so bad if the house was worth $400,000 after 30 years, but that's not going to happen. In fact, considering the current economic trajectory of the housing market, you'll be lucky if the house is worth what you paid for it after 30 years.
Then people always say... "well, if you had invested the money instead, and gotten a 30-year mortgage, I'd make out way better."
I really don't believe that's true. First, in order to "make out better", the return on my investment has to be HIGHER than the interest rate on my mortgage. Current mortgage rates are around 4.5%, so I'd need to have a return better than that, on average over a 30-year period to come out ahead. Bonds don't yield over 4.5%, CD's certainly don't, all that's basically left are stocks, mutual funds, and ETFs, none of which is particularly stable or guaranteed. Sure, I MIGHT make more in the stock market, but I could also lose it all. Over thirty years, it's a huge gamble.
Plus, without a mortgage, I can take the money that I would have spent on the mortgage payment each month and invest if I so choose, so I still have the opportunity to make some money that way if I want.
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