Mortgage Payoff Debate

What if the cost of the monthly interest on your mortgage for that $500k house was less than your rent?

Your math only works if you're near the end of your mortgage life. At the beginning, nearly every penny of your mortgage payment goes to interest, which is front-loaded.For most Americans, who move around fairly often, they will never come close to paying off a mortgage and the only equity they will ever own will be what they bought with their down payment plus whatever they get on the margin if the value of the house goes up.If you, say, live in a house for five years and then move,

Same reason people buy a house with a mortgage and not straight cash.

I think you're overlooking the interest payments, which are gone forever as well. If you have a 300k mortgage at 6%, you are paying 18k year (1500 month) in interest alone. Yes, there are tax advantages but I think this is negated by property taxes, PMI insurance, etc. Your mortgage payments aren't buying equity in your house.

You are forgetting that your down payment ( and equity )is tied up in the house, when it could be invested elsewhere.

There can be totally valid reasons for not getting rid of your mortgage even if you have the opportunity - if you have something better to do with the money. If you are paying 3.5% on your mortgage but you can invest somewhere with a return greater than 3.5% after tax, why would you pay down your mortgage?

Mortgages are being given away now that the mortgage rate is about the same as inflation. The mortgage is now the asset and the home is the liability. It is probably you can make more by paying off the mortgage then investing the down payment and try to bring that investment up to the level of the mortgage (plus having enough for capital gains tax).It may be a unique situation in our lifetime that is only possible because the fed is buying trillions of dollars of mortgage backed securities wh

At current interest rates you are setting more money on fire by taking out a 8% mortgage instead of renting.

Interest rates have gone down though. Presumably you sell your house and break the current 3.5% mortgage. Then buy a bigger / more expensive house and lock in at 1.5%. Overall your monthly payments remain similar.

People are having trouble getting this. Consider:- if you expect to get a 1% pay increase every year, is it reasonable to take out a mortgage at 3% and pay $X/mo for 25 years? Yes, and at the end of the term it will be a smaller fraction of your expenditure. And if your house goes up in value by 1% you're benefiting there as well.- if you expect to get a 1% pay cut every year, is it reasonable to take out a mortgage at 1% and pay $X/mo for 25 years? No, that's go