Mortgages: Some Thoughts

It never ceases to amaze me that people think a mortgage is so great. The only plus to this form of debt is that it allows people to purchase property who otherwise would have to save up for most of their lives to afford the same property, only to see the price go up.

What is a "mortgage"? Well, the latin roots, "mort" and "gage", roughly mean "death" and "pledge". So a mortgage is a death pledge...interesting. One could view this in a number of ways: 1) you pay until you die, or 2) you probably won't be able to pay it off before you die, so you pledge the asset itself as collateral.

"But it's a great tax shelter" I'm told. Yes...it does reduce your income tax liability, by about $0.30 on every dollar you pay in mortgage interest income. You still pay through for the privilege of borrowing the money, and your creditors double their money. The government simply gives you a discount so you don't mind getting into all that debt...it's amazing you can't do this with credit card debt (but I think you will be able to some day).

You're better off paying the mortgage off as soon as you can, even with a low interest rate. Yes...you'll have to pay more income tax, but you'll own your property and have more money in your pocket.