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[quote=Anonymous][quote=Anonymous]I'm not a CFA, but I did stay at a Holiday Inn last night.

- Paying off a mortgage is not a risk-free return.  I don't need to tell you that real estate can decrease (dramatically) in value, and paying extra principal can lead to losses in the event of a bankruptcy, foreclosure, or short sale.  Most people probably think this wouldn't or couldn't happen to them, but as we learned in 2008, it can affect a sizable portion of the population, including the wealthy.

- The liquidity point is a valid one.  Real Estate is a relatively illiquid asset.  Yes, you can borrow against equity with a HELOQ, or you can sell the house, but both of those incur costs.  It shouldn't be the only determining factor, but it should be a consideration.

- I didn't read every post in the thread, but the most important point should be diversification.  The average American has way too much of their net worth tied up in their primary residence.  Paying down a mortgage increases your concentration in real estate and your exposure to risk in that asset class.  If you are sufficiently diversified elsewhere, it might be a great move.   If not, it might not be advisable.[/quote]

Once you buy the house with a mortgage, you are already exposed to the full risk in the real estate asset class.  Paying your mortgage off or not does not change the fact that you are on the hook for the full value of the mortgage.  Same with your comment about real estate decreasing in value.... you aren't protected from a decline in value just b/c you still have a mortgage... unless you plan to file bankruptcy or default on the loan.  If the market value goes down and you sell, you still have to come up with the amount of the loan.  [/quote]

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