Part of my thought process is the fact that you ca walk away but the real risk reduction I see is the fact that you currently know what the interest rate environment is. How do you know what the cost of money is going to be in 3, 5 or 10 years.
I know for a fact that if they go lower I can refinance form the 5 or 6 % I can get today. I also know that I can prepay down the mortgage. But if I park a big chunk of cash as a down payment and the interest rate environment were to shift at a period of time that I need to borrow then I would be pissed that I had not purchaed my money when it was cheap. By buying things at discounts we do a better job of reducing our exposure to risk.
My timeline for planning is further out than the normal person. And I will admit that I oten times get the urge to just pay all of my bills off and be debt free. But every time I log in to do it I am reminded that every thousand of debt I pay off costs me roughly 40 to 50 dollars in pretax risk free return. So I can fully relate to those who like the thought of being debt free. Unfortunately jsut as it would aggravate me to come to my car and see a ticket on the windshield , it would equally bother me to pay off debts that are allowing me to earn risk free money.
