Reply to If paying off your mortgage is dumb, why do so many rich people do it?

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Reply to "If paying off your mortgage is dumb, why do so many rich people do it?"

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[quote=Anonymous][quote=Anonymous]Paying a mortgage means paying interest. Why pay interest if you don't have to? Pretty simple.[/quote]

Because there are better ways to use that chunk of $ that you would use to pay off your mortgage early.

I get that the thought process it isn't as simple as "interest = bad, therefore must get rid of mortgage to avoid interest payments", but when you do the math it really does make more sense to just continue to pay the mortgage and use that money in an investment that pays more than the rate of the mortgage interest.

Maybe it is a generational thing? I grew up in a time when mortgage rates were crazy high-- like 15%!  So these current 3% 30 year fixed interest rates are so low that I just can't bring myself to pay it off early, even though I could by selling mutual funds.

Besides, if the economy crashes, I will still have a crazy low interest rate on my mortgage locked in while everything else could get rocky.  If, God forbid, if I lose my job and my mutual funds, I'm confident the bank will have far bigger fish to fry at that moment than to evict me from my home.  The bank would likely be happy to keep it owner occupied and would renegotiate payments/interest, etc.  It costs banks real money to go through the eviction process.

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