No. of Recommendations: 1
Never Pay Off Your Mortgage

Before you stop reading, I think I have some good arguments...

1) Why your parents say "pay it off".
During the days of the depression, banks could actually come in and take your home, even if you had a mortgage contract with the Bank. Today, this is illegal. If you have a mortgage, then as long as you are making your payments, the Bank CAN NOT take your home away.

2) Inflation Rate
If my Dad had a 30 year Mortgage, his Mortgage payment today will be the same as it was 30 years ago. This is how a Mortgage contract works for Fixed Rate Interest. So his mortgage payment today is probably on $200 a month (which was a lot 30 years ago, and nothing today). The point here is that, your Mortgage payment will get less and less significant as your income grows. (Which, by the way, your income will grow simply because inflation is 3% per year).

3) Return on Investment.
If I put 100K into my 100K home, and the home is worth 150K in 10 years, then I made a Whoopping 50% on my initial investment in 10 years.

If I only put 10K into my 100K home, and over the 10 years, I put an additional 20K into it via my Mortgage payments, (30K total), then my return is 500%.

The point here is, the less you pay on your home, the better your return will be. You see, you get to realize the Equity no matter how much you have paid on the home!

4) Better Investments
Finally, the Stock Market (over the Long Haul) returns an average of 11% per year. This beats the rate of your Mortgage by more than 3% per year (assuming your Fixed rate is less that 8%).

So, give it some thought. I will NEVER pay off my home.

Good luck, all
the hendrys
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