Is it a bad idea to take on a 30 year mortgage at age 45 ?

[Gfactor]

@BobLibDem

I’d take out the longest mortgage I could. For one thing, paying that interest will keep you over the threshold for itemizing on your taxes, so not only will you deduct the interest, you’ll be able to deduct state and local taxes, property taxes, etc where you might not otherwise.

Another angle- suppose your mortgage interest is 6 1/2 % but your house appreciates in value by 8% each year. With tax breaks, you’re really only paying an effective rate of 4%. So when you borrow at 4% and earn at 8%, it makes sense to do this on the largest sum of money that you can.

It is never sensible take out a home mortgage for tax reasons alone unless you have investment opportunities that provide risk-adjusted yields that are higher than the cost of the mortgage.

Should I Take a Mortgage For the Tax Deduction?

Nationally, the overall outlook seems reasonable: 7 percent appreciation for 2006 and flat for 2007. But markets that have seen the greatest appreciation over the past five years appear to be vulnerable.

Indeed, at some point in the next two years, according to the forecast, a third of the nation’s 100 largest metro areas (accounting for 60 percent of the U.S. population) are expected to see modestly falling house prices.

http://money.cnn.com/pf/features/lists/re_growth_forecast/2007.html

[muttrox]

@Jpeg Jones

You can’t go wrong in real estate in the long term.

Sure you can. Generally, I’d agree that it’s a good long-term strategy, and the odds are on your side, but plenty of people have lost everything they had in real estate.

[Max_Torque]

@ChuckForbin

Thanks for the advice. I looked a bit more into this last night and I think I understand the situation a bit more. The idea of taking a 30 and paying extra seems like a very interesting one, especially as far as mixing in the retirement planning issue. The links supplied offer a lot of help and I appreciate your replies.

Tonight, I’ll crack open a beer and get this all straight. If it gets too complicated , I’ll convert it all to a suitcase full of cash and head for the Caymans

One easy “extra payment” option, especially if you get paid every two weeks, is paying bi-weekly rather than monthly. Because there are 52 weeks in a year, by making a half-payment every two weeks you’ll wind up making 26 half payments, or 13 payments, in a year, as opposed to the usual twelve. That extra payment all goes to the principal. Just by making that extra payment, you’ll shave about 6-7 years off the length of a 30-year loan, and you’ll wind up paying a lot less in interest.