When the stock market crashed in 1929, the banks called (demanded immediate payment on ) home loans in the 1920's due to the run on banks, which led to homeowners losing their homes. This is when people starting believing it was bad to have a mortgage and that it was bad to be in debt. Then, mortgage loans could be called on a moment's notice, but today, due to a change in the rule, the bank is prohibited from paying in full without prior notice, and can only demand this month's payment. People have been trained to think of debt elimination and being debt-free due to this history.
- Mortgages don't affect home values--mortgage is not a debt, it is an asset class.
- Equity is built whether or not there is a mortgage, it is built due to market growth in value.
- A mortgage is the cheapest money you can borrow because it is secured by the property (unlike most debt which is unsecured and is given at much higher interest).
- Mortgage interest is tax-deductible.
- Mortgage interest is tax-favorable.
- Mortgage payments get easier over time, the payment never grows, but your income does.
- Mortgages allow you to sell without selling; owners have the opportunity to use the equity.
- Mortgages enable you to create more wealth than you otherwise would.
- Mortgages allow you to invest more money more quickly.
- Mortgages give you greater liquidity and greater flexibility. The 30-year loan may actually give a better return than a 15-year loan--if you save and invest the difference.
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