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Subject:  Re: Do you have a rational home equity policy? Date:  1/27/2005  9:39 PM
Author:  yobria Number:  44254 of 94100

I think that this decision is based on so many variables which are different for each individual...which include:

Tax Effects - Marginal ordinary income tax rates, LTCG tax rates, and AMT exposure both before and after 'retirement'.
Mortgage rates
Home ownership vs: renting
Individual Risk Tolerance
Availability of discretionary dollars


Great post, I think you've got it all figured out. And interesting question to ask people who have a mortgage and a taxable account is: Why not buy stocks on margin? After all, you can deduct the margin interest, so your cost of capital is only 3-4%. Of course margin interest is variable, but otherwise investing and having a mortgage is no different than buying on margin (something most sensible investors don't do).

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