[jyl]

Quick numbers, just food for thought.

$500,000 mortgage, 30 years, interest rate 4%. Annual payment $28,644, total interest paid over life of loan $359,384. But mortgage interest is deductible, if marginal federal+state income tax rate is 40% (assumes a high earner in a state with high income tax rate) then after tax interest paid is $215,630. Which is equivalent to an after-tax interest rate of about 2.5%. Any time you can borrow money at 2.5% to buy an asset that is at least reasonably likely to appreciate, and also serves as shelter, you should. Okay, if your crystal ball shows a major real estate correction in the near future, then you shouldn't . . .