Although "till death do us part" is a solemn vow we take in marriage, expecting we'll live happily ever after with our betrothed, we ought to be adding that to our mortgage contracts too.
Perhaps, like marrying our significant other, we ought to be getting married to our mortgages. In fact, we should be getting the biggest mortgage possible for as long as possible -- and stop thinking about paying it off early. There are a lot of very good reasons why you might want to stay with your mortgage as long as possible.
Consider these reasons for getting married to your mortgage:
- Mortgages are cheap. In fact, it's some of the cheapest money you can borrow. At around 6%, a mortgage is less than half of the 13.9% rate that a typical cashback credit card is charging, according to Bankrate. Why carry a balance on your credit card when you can borrow mortgage money at half the rate?
- Mortgages are tax deductible. Unlike credit card and other forms of debt with their higher rates of interest, mortgage debt is still tax deductible. If you're in the highest federal tax bracket of 35%, that means that a 6% mortgage is really only costing you around 4% after tax, since the federal government sponsors more than a third of it.
- You can earn interest. Instead of getting a 15-year loan or enrolling in a biweekly payment plan, invest that extra money to make money for yourself. That extra $500 you'd be sending to the mortgage company -- to pay off that cheap 6% mortgage early -- could earn a lot more over time, if you make the right investments.
- Mortgages get cheaper over time. The beauty of fixed mortgage is that your monthly payment stays exactly the same, regardless of how times change. When your income rises, that payment gets easier to afford. What once may have made up 30% or more of your salary when you got the mortgage will probably be a much smaller percentage at the end.
- It makes no difference to your home value. Regardless of whether you pay off your mortgage early or you get a gigundo mortgage for as long as you can and never pay it off, the value will rise or fall the same way. But staying committed to a mortgage means you can use your money for other needs.
Having your money tied up in your house -- which is what you're doing when you pay your mortgage off early -- can cause big problems. You may find yourself in dire financial straits if calamity should strike. If you lose your job, become sick or injured and can't work, or retire, you never know if you'll be able to borrow money on all that equity you've created by paying it off early.
By using the value of your house to your advantage, however, you can give yourself more options in the event you need money for whatever catastrophic situation may befall you.
Of course, you can't live under a mountain of mortgage debt and then go out and charge up your credit cards after the fact. And don't take that money and spend it on frivolous things either. That's not smart financial planning -- rather, it's a type of living dangerously that we'd never recommend.
So as much as we may love our significant other and want to spend eternity with them, consider marrying your mortgage for just as long ... if not longer.
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This article, written by Rich Duprey, was originally published on April 19, 2007. It has been updated. The Motley Fool has a disclosure policy.