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I don't think I quite understand your description here. Could you post an example?

Ok, Felice, here's what I'm talking about. I ran this using the financial calculators available here on this site, so you can go there yourself and run some numbers.

I assumed having $100,000 cash available todat to either buy a house outright or to invrst and then take a $100,000 mortgage.

Using the "How advantageous are extra payments?" link, I assumed a $100,000, 30 year motgage at 7%, and had it calculate what you'd save in interest if you mailed in $100K and paid it off a month from now. the calculator told me it would be about $139,000 over the 30 years. Now, since the loan is tax-deductable, you can shave 20% off that figure for what Uncle Sam would give you back, making your net savings just over $110K.

Now, let's swing over to the calculator titled "How much will my savings be worth?" Put in the $100K as a starting balance with zero additional each month. Let's say you match the historical long-term return for the market, which is about 10%. The calculator says that that value will grow to $805,088 after 30 years after taxes. You made $705,088 subtracting your initial investment.

It seems to me that the advantage to taking out the mortgage and investing the cash in hand in this case nets you about 600 grand over the 30 years.

That was my thinking on this. I'd be interested in any other Fools who read this post to comment on the reasoning here. Maybe there is something I'm not considering.
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