The I bond interest rate could easily go down. Maximum I-bond investment is $30K/year. What will you do with the other $570K?
How does your plan stack up assuming 4.75% CD, taxable? If the bank goes under while holding your loan, what happens? Won’t they call it?
The way I see it, you can pay 6% interest on a morgage and earn 4.75% interest on a CD, so you’re worse off getting the mortgage. Assume the tax writeoff for the mortgage interest negates the tax due on the interest earned. I don’t see any way the banking system lets you borrow at a lower rate than you can earn, unless you take on significantly higher risk. It works the opposite way – at a low risk, your earnings on a risk-free investment are less than the payments. That’s how banks make their money.
I look forward to a reply. I may have missed something.
” Now if the house goes down in value it is on the banks books not yours”
I’m not sure if I follow this line of logic? You still carry the note. You are just plain stuck with a property worth substantially less than the loan and potentially unable to pay if interest drops at some point – The very same vice that many others will get squeezed by to the breaking point (BK). Take a riskier path with the $$$$$ and it may disappear.
Sell it to some sucker that can prompty ride it down and file BK. You can buy it back from the lenders if you are so fond of it. Otherwise, take your cash and buy somethng for 1/2 the $$$$ in another state like the smart ones are doing.
You should consult a CPA about mortgage deduction. I heard a radio show someone who paid cash for a house and was told that that to get mortgage deduction a loan had to be obtained within a certain time,1 year??
.
