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10 Reasons to Carry a Big Long-term Mortgage

Reason #1: Your mortgage doesn’t affect your home’s value.
You’re buying your home because you think it will rise in value over time. (Admit it: If you were certain it would fall in value, you wouldn’t buy it — you’d rent instead.) Yet, the eventual rise (or fall) in value will occur whether you have a mortgage or not. So go ahead and get a mortgage: Your house’s value will be unaffected.That’s why owning your home outright is like having money buried under a mattress. Since the house will grow with or without a mortgage, any equity you currently have in the house is, essentially, earning no interest. You wouldn’t stuff ten grand under your mattress, so why stash two hundred thousand into the walls of the house? Having a long-term mortgage lets your equity grow while your home’s value grows.

Reason #2: You’re going to build equity anyway.
Many homeowners try to build equity in their house by paying off the mortgage. But that produces weak results when compared to the equity you’ll build simply by watching the house appreciate in value. So go ahead – keep the mortgage. You’ll build plenty of equity anyway.

Reason #3: A mortgage is cheap money.
There’s no way you can avoid debt in today’s society. Cars and college – let alone big screen TV’s — virtually require you to have loans. And you’ll find that mortgages offer you perhaps the cheapest way to borrow. Mortgage loans offer low interest rates because you post the house as collateral: If you fail to repay the loan, the lender sells your house to recoup its money. (By contrast, if you buy clothes with VISA, the credit card company can’t repossess your sweater when you fail to pay your credit card bill. That’s why VISA charges as much as 18% to 24%: Collecting high interest from some customers reduces its losses when other customers don’t repay their loans.)

Reason #4: Mortgage interest is tax-deductible.

Reason #5: Mortgage interest is tax-favorable.

Reason #6: Mortgage payments get easier over time.

Reason #7: Mortgages let you sell without selling.

Reason #8: Large mortgages let you invest more money more quickly.

Reason #9: Long-term mortgages let you create more wealth.

Reason #10: Mortgages give you greater liquidity and greater flexibility.