Quote:
Originally Posted by madmmac
If your investment strategy is making more % wise than the cost % on your loan or CC, then you are that much ahead by not using your investment funds to pay it down and to keep putting your money towards those investment funds.
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Right.
Rough figures, If you owe $100k @ 5% on your house, that $100k that you've borrowed is really only costing you about 3% after you write the interest off your taxes, i.e., your mtg. is effectively at 3%.
So, if you have $100k in investments paying 5% and you use it to pay off your $100k mtg,, which is really at 3%, you're losing 2%, maybe more, depending on your tax situation.
I think a lot of people don't realize this or don't care because it's psychologically comforting to them to have their house paid off.