Reply to If you inherited a million dollars, WWYD?

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[quote=Anonymous][quote=Anonymous]I would consult an expert on the smartest mortgage balance to carry, with regard to tax benefits, and refinance to get the best rate on that sum. [b](PP, I was always told it was smart to have a mortgage for the tax deduction, and I would expect that's especially true with these rock-bottom rates. [/b]But then, it was sort of a conventional-wisdom thing, so that's why I'd want to talk to an advisor.) I expect it would cost me around $150k to get where I want to be, mortgage-wise.

Spend maybe $10-15k on a few little upgrades around the house. Replace the 12 year old car. Take a proper vacation, instead of yet another road trip to stay on the couch of a family member.

And I'm done! The rest can go to college and retirement savings. The emergency fund is already in good shape.

[/quote]

First, it's only "better" to carry a mortgage if your return on investment, after taxes, exceeds your mortgage payments, after tax benefits.  It's not an automatic thing.  Second, the tax benefit of a mortgage is directly tied to the interest rate - the more interest you pay, the bigger the deduction.  So low interest rates may suggest against keeping a mortgage for the tax benefit, although cheap money may suggest that it's silly to pay off the mortgage for other reasons.  [/quote]

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