Fact:Since you need to borrow money during the course of your lifetime,doesn't make sense to borrow money as inexpensively as possible?
You should avoid high-interest,non-deductible debt such as credit cards,auto loans and personal loans.Instead choose the better way...
Note:Consult a financial adviser before you make any investment decision

15-year mortgage at 6.38% APR $40,000 big down payment $0 left to invest $1,383 monthly payment (56% is tax deductible first year/33% average) $1,227 average monthly net after-tax cost Sends $100 monthly to lender in effort to eliminate mortgage sooner

30-year interest-only loan at 7.42% APR $10,000 small down payment $30,000 remaining to invest $1,175 monthly payment (100% is tax-deductible first 15 years/64% average) $799 monthly net after-tax cost Adds $100 monthly to investments,plus $428 saved from lower mortgage payment,where account earns 8% rate of return

Who made the right decision?

Received $14,216 in tax savings Has $0 in savings and investments

Received $22,557 in tax savings Has $83,513 in savings and investments

What if both borrowers suddenly lose their jobs?

Has no savings to get through crisis Can't get a loan-even though he has $74,320 more in equity than his brother-because he has no job Must sell his home or face foreclosure because he can't make payments At this point,it's a fire sale,so he must sell at a discount,then pay real estate commissions(6-7%)

Has $83,513 in savings to tide him over Doesn't need a loan Can easily make his mortgage payment even if he's unemployed for years Has no reason to panic he's still in control-remember...Cash is King!

How ironic: Borrower "A",who never wanted a mortgage in the first place,is now in financial jeopardy because he was trying to get rid of his loan too quickly ! Borrower "B" the Power That Be

Results After 15 Years

Receives $25,080 in tax savings Has $30,421 in savings and investments Owns home outright

Received $67,670 in tax saving Has $282,019 in savings and investments Remaining mortgage balance is $190,000-and he has enough savings to pay it off and still have $92,019 left over,free and clear

Results After 30 Years

Received $25,080 in tax savings Has $613,858 in savings and investments Owns home outright

Received $107,826 in tax savings Has $1,115,425 in savings and investments Owns home outright-so starts fresh and enjoys the same benefits once again