Originally Posted by chuckerants
Interest payment on a mortgage is tax deductible (for most people).
I never did get to take it off my taxes. My INT was never high enough to do anything but the standard deduction. My first house only cost $42K (30 year mortgage paid off in 12) and the second house was $185K (15 year mortage refi'd for 30 but paid off in 4). We had it down to about $100K the first year (not much in INT payments).
Actually (you investment guys are going to LOVE this), I took a $45K loan on my 401K and paid off my house 3 months ago. So, my house was really paid off 5 years after moving in. I took the 5 year 401K loan in June and have paid off the first 2 years of it so far. So, I have a max of 3 years left on it but am trying to pay it off in 2 years.
Justification for taking the money out of the 401K?
- I was forced to pay off the house in 5 years vs 30 years
- If I lost my job tomorrow I would own my house. Hell, I can pick up cans off of the side of the road and make enough money to live on.
- Even after taking the $45K out of the 401K I still have more in there than most of the guys I work with since I put 20% a year in for many years.
- Once the 401K loan is paid back it will be gravy city. I'll max out the 401K and Roth and the OPTIONS that Chuckerants talks about will be wide open to me. Of course, I'll still be a tight *** bastard and probabably won't enjoy spending money <G>.
Emotionally it was the right thing to do. Financially, the numbers may not add up but I sleep better at night. If your house is paid off you can honestly say **** YOU to your boss and not worry about the consequences. We just had a bunch of layoffs a few months ago and I am not worried at all. The other guys here walk around like zombies because they are scared to death at what the future holds. Not me! It took 20 years of hard work and people telling me I was screwing up but it was worth it.