If you had the money, would you just invest on a house and not worry about mortgages?
My roomate is telling me that it is better to have a mortgage even though you have the money to buy the house of your dreams.
Why is that?
Tags: House, Invest, Just, Money, Mortgages, worry, Would
If you can deduct the interest on your taxes…..sometimes it is a benefit to pay the mortgage instead of uncle sam. Each case is different but I would say usually no, you’re throwing $1,000′s away a month in interest for nothing if you have the cash. You usually can’t get a high return on investments to offset the mortgage interest.
I agree. If you look at what u have to pay to be able to deduct so very little for what u spend its not worth it
it is best to live debt free. you will also save hundreds of thousands of dallors in interest. don’t believe them when they tell you that you need the tax write off. the tax write off doesn’t make up the amount you save on interest it’s not even close
Shaquille O’Neil has a mortgage. It’s called leverage.
While the tax deduction is important, you also have to consider where your money will do you most for you.
If you have money, it will serve you better in some sort of investment. You’ll make the same gains on the home either way, but when you have $100,000, you could invest it and make, let’s say, 8% on it while borrowing the mortgage money at 6% and deducting the 6% from your taxes.
If you’re in a forty percent bracket, you’ll figure that the borrowed money probably cost you 3.5% after the deduction, so you’re making about 4.5% on the $100,000, or $5,000 or $6000 all said.
It’s not a lot of money, but it is basic smart business.
Pay off the house. Keeping a mortgage for the tax deduction is a bad idea. Anyone who says it’s smart, didn’t factor in risk. If you borrow $100,000 at 6% the interest on it is going to be $6000/year. If you’re in a 40% bracket as stated above you won’t have to pay taxes on $6000, which would be $2400. So bascially you’re paying the bank $6000 so you won’t have to pay the government $2400. Doesn’t make sense.
But you’ll have more money, right? If you’re borrowing at 6% and reinvest it at 8% you’re making $2000 a year. After paying taxes on it, it’s a lot like $1200.
Sure you may come out with an extra $100 a month. But if i’m living next to you and i have a paid for house, and you have a $100,000 mortgage with the money in an investment….and we both lose our jobs. I’d say the person without the mortgage is better off.
Yes, because the interest is tax deductible and it builds equity and a good credit report.