From the point of view of sleep at night, many people prefer to have their house paid off so there isn't the drain on cash flow, particularly in retirement. From the point of view of hard numbers, over a long period, the Foolish thing is take out as big a mortgage for as long as you can; make payments as small as possible, keep the money in investments and not in the house. If real estate increases in value, it will do so just as much if you only own 20%. One aspect of this is that once you have qualified for a mortgage, it gives you a chance at liquidity. If you need money for medical expenses or an emergency and the money is tied up in the house, it is very difficult to get at it. Sure, you can get a home equity loan, but that would be at a higher rate. I'd also add, don't pay points. The interest rates now are higher than a couple of years back and the long-term in rates is probably lower, which suggests you might be wanting to refinance in a couple of years. If this is the case, points (effectively interest paid up front) reduce the desirability of the refinancing. Best wishes, Chris
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