MIT,
Your question is more philosophical than anything.
I could discuss this for an hour.
Paying down any debt is simply paying off principal in addition to the interest due.
The question is does it make sense.
I have had people tell me that they are paying their mortgage debt down faster, yet they have consumer debt, which is not tax deductible at rates of 7%-25%. Assuming that they don’t plan on BK and will pay it off someday, they are being foolish.
IF history repeats itself, you will pay off a 30 YR mortgage with cheaper inflated dollars.
I also believe that in a few years, CD rates could be 8%-10% or higher. Paying off a 5% mortgage will look foolish if that happens.
There are pros and cons, and no one right answer for everyone.
Choice is to opt for more cash in your pocket now, with debt for a longer period of time as opposed to less cash in the pocket now, with less debt service later in life.
Managed debt isn’t so crazy.
Many people today have equity in their house but cannot get to it because they don’t qualify for a loan. In many cases this is because they paid their mortgage down faster than perhaps they should have.
I can make an argument for both sides. It depends on your personal situation, and understanding the projections…. HLS
