Reply to Why not pay down the mortgage?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]You are getting a tax deduction for the interest paid per year on your mortgage- so really you are eliminating your own tax deduction.[/quote]

You only get the deduction because you are paying taxes.    Clearly this dilutes the return so you need to be comfortable with paying down your mortgage and effectively paying yourself a return of 2-3% but it is a risk free 2-3% which is great when mixed with other assets.

[b]Saying that you are eliminating your tax deduction is like getting one of those coupons where you save $50 if you spend $200 - I saved $50!!!!!! - nope.  You spent $150[/b][/quote]

Incorrect.  If you eliminate your tax deduction you need to subtract this amount from the cash you now have free to invest.  If you pay off your mortgage let’s say you now don’t have a $2k mortgage payment.  Great but you also lose the tax deduction so it’s more like $1,500.  This just reduced the benefit to you of paying off your mortgage.  [/quote]

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