I see your points here, but these are trickier than you're making them out to be.
Using the numbers you're putting out here, if you put 20% down on a $500,000 home ($100,000 while borrowing $400,000) there's a couple of discrepancies.
First, paying off the mortgage early. You're right, once it's paid off you will be earning 0% interest. Assuming you don't pay it off early and go with the full 30 year schedule and I'm going to assume a 4% interest rate here, your total payment price will be about $875,000. By paying off early you're eliminating those losses. It's not that you're earning 0%, it's that you're not losing over -100%.
If your home goes up 10%, regardless of whether it's paid off or leverage you actually didn't make anything. You don't make anything on real estate until you sell it to cash out. Until then, any gains in a home that's paid off or mortgaged are identical. The only difference is if you didn't put 20% down and were also paying extra for PMI then the increase in value could get you out of PMI.
Yes, the money on your loan could have been earning interest. Instead it's losing interest so you need to find a guaranteed return higher than your mortgage rate. Guaranteed is the trick there. If you can pull it off with a whole life policy, then great. Without the guarantee market volatility comes into play. If you're a person who is comfortable taking out a loan to invest in something else, your perspective will clearly differ here though.
#4 is admittedly a very good an interesting point that I had not considered at all.
Regarding the mortgage interest being tax deductible, that only gets you back the equivalent you would have paid in income tax. 80% of it is still full interest.
I'll definitely look into the videos and whole life policies though. Anytime I talk about putting money into paying off a mortgage early I always have an equity line open on the house so that I can pull most if it back out for emergencies, including making the actual mortgage payments in the event of a lapse in income for some reason.
With that, available it makes it easier to avoid the foreclosure because you've got a way to use the equity to avoid default and by yourself time. You just have to open the line of credit when you aren't having bad luck.
Using the numbers you're putting out here, if you put 20% down on a $500,000 home ($100,000 while borrowing $400,000) there's a couple of discrepancies.
First, paying off the mortgage early. You're right, once it's paid off you will be earning 0% interest. Assuming you don't pay it off early and go with the full 30 year schedule and I'm going to assume a 4% interest rate here, your total payment price will be about $875,000. By paying off early you're eliminating those losses. It's not that you're earning 0%, it's that you're not losing over -100%.
If your home goes up 10%, regardless of whether it's paid off or leverage you actually didn't make anything. You don't make anything on real estate until you sell it to cash out. Until then, any gains in a home that's paid off or mortgaged are identical. The only difference is if you didn't put 20% down and were also paying extra for PMI then the increase in value could get you out of PMI.
Yes, the money on your loan could have been earning interest. Instead it's losing interest so you need to find a guaranteed return higher than your mortgage rate. Guaranteed is the trick there. If you can pull it off with a whole life policy, then great. Without the guarantee market volatility comes into play. If you're a person who is comfortable taking out a loan to invest in something else, your perspective will clearly differ here though.
#4 is admittedly a very good an interesting point that I had not considered at all.
Regarding the mortgage interest being tax deductible, that only gets you back the equivalent you would have paid in income tax. 80% of it is still full interest.
I'll definitely look into the videos and whole life policies though. Anytime I talk about putting money into paying off a mortgage early I always have an equity line open on the house so that I can pull most if it back out for emergencies, including making the actual mortgage payments in the event of a lapse in income for some reason.
With that, available it makes it easier to avoid the foreclosure because you've got a way to use the equity to avoid default and by yourself time. You just have to open the line of credit when you aren't having bad luck.