mgoddo really liked it so I am happy to let everyone here share with the resource that he's found. It appears to have at least gotten your brain thinking about the possibilities! 8)
A very good point. As I stated earlier you need to be able to earn ROI from other investments that is greater than the rate of interest on your mortgage. This is certainly not guaranteed, but 8% is quite reasonable.
This is somewhat true. There are a lot of things that go into each person's tax return so it is hard to say whether you would itemize or take the standard. You might already have large medical expenses to itemize so this argument would then be moot. But yes, if you take the standard deduction then you gain no tax benefit from higher interest on a personal residence.
I agree 100%. You can't invest what you don't have. :D
This isn't necessarily true. I can invest in
tax-exempt bonds or I could put my savings into a
Roth IRA. In fact this is what I do personally and it is a good choice for some people. So your argument of taking away 25% for capital gains tax is 1) too high for our current rate system and 2) not even relevant if you can get tax-free returns. It is quite possible for Brother B to invest the difference @ 8% and actually have more net assets than Brother A after 15 years. Plus let's not forget... Brother B has LIQUID assets, but Brother A's assets are not liquid. If he has to sell that house quickly... then he finds me and I buy it at a discount of, say, 30% :mrgreen:
I don't have facts to prove this right or wrong, but I would love to see some.
That's not exactly what the article says... read it again. It says that Brother B has more cash in his pocket and can make his mortgage payments from his savings while Brother A can't get a loan and needs to sell his house (to me for a discount of... oh, never mind :wink: ). No one ever went bankrupt with a ton of cash sitting in the bank!
Not only that, but Brother A's house is worth more to the bank in the case of foreclosure. They already have received a lot of Brother A's money and now they're going to sell the house and make a nice profit. If they try to sell Brother B's house they're going to realize a loss so, but if Brother B can work out his loan then the bank can continue to profit from his interest payments.
Sometimes this is the right choice! Sometimes not. I will say it again: compare the rate of return you can make on investments with the interest rate of your mortgage.
A very good point, but not 100% clear cut for everyone.
Another good point, but there are ways around this. As an example municipal bonds are very liquid and they are tax-free.
This ad isn't as crazy as it looks on first glance, but it is quite different from the conventional way of thinking.
Actually the biggest problem that I have with the article is this: most Americans don't save. When they have extra cash on hand they decide to spend it rather than save or invest. A person with a "frugal" mindset is better off acting like Brother B, but if he's a free spender then he should follow Brother A's example and hope for the best! :idea:
