Docteur made millions on his last deal, and paid off his house. I think it was a wise move. I bet Warren Buffett paid off his house too. My former neighbors are $10K away from paying theirs off.
Why do people who can afford to, pay off their homes? Because they can.
Besides, where else can you get a 5% return? Maybe in a CD, but after taxes, you’re easily down to 3.5-4%. In the stock market? Not risk free. You risk losing principal. As a matter of fact, many investment pros are now advising people to get out of the stock market (Bill Fleckenstein, Barry Ritholtz, Yakamoto Forecast, Zeal Newsletter, economist Joseph Ellis).
The days of the carry trade are over. No longer can you borrow at 0% from the Bank of Japan, or at 3% from your home, and hope to make more money in stocks. Interest rates on homes are high, and the stock market is overvalued.
I am curious though, where you can do better than the interest rate on your home, without taking on more risk?
