# What are the benefits of paying off your house?
**URL:** https://boards.straightdope.com/t/what-are-the-benefits-of-paying-off-your-house/753211
**Category:** Factual Questions
**Created:** [April 26, 2016, 8:03pm UTC](https://boards.straightdope.com/t/what-are-the-benefits-of-paying-off-your-house/753211 "2016-04-26T20:03:15Z")
**Posts on this page:** 6
**Page:** 5
### Author:  [@ZipperJJ](https://boards.straightdope.com/u/ZipperJJ)
#### Post date: [April 29, 2016, 1:49pm UTC](https://boards.straightdope.com/t/what-are-the-benefits-of-paying-off-your-house/753211/81 "2016-04-29T13:49:14Z")
> [@ftg](#):
>
> Let’s do an example. Buy a $25k house (I’m not kidding) with $2k down. 4 years later, sell the house for $60k (again, not kidding). You just made $58k profit on a $2k investment. While you were making monthly payments, etc., even you rented you’d still have payments and the profit easily covers any extra expenses and then some.
I don’t think they made $58k. They still had to pay off $23k worth of house before it could be turned over to the new buyer. Still a lovely investment but “only” a $35k profit (minus the few bucks for interest they had paid).
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### Author:  [@ftg](https://boards.straightdope.com/u/ftg)
#### Post date: [April 29, 2016, 6:59pm UTC](https://boards.straightdope.com/t/what-are-the-benefits-of-paying-off-your-house/753211/82 "2016-04-29T18:59:13Z")
> [@ZipperJJ](#):
>
> I don’t think they made $58k. They still had to pay off $23k worth of house before it could be turned over to the new buyer. Still a lovely investment but “only” a $35k profit (minus the few bucks for interest they had paid).
Holey Moley. Did I screw up the Math on that. I … (nevermind. Sneaks off.)
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### Author:  [@MrAvg](https://boards.straightdope.com/u/MrAvg)
#### Post date: [April 30, 2016, 12:47am UTC](https://boards.straightdope.com/t/what-are-the-benefits-of-paying-off-your-house/753211/83 "2016-04-30T00:47:23Z")
> [@ZipperJJ](#):
>
> I don’t think they made $58k. They still had to pay off $23k worth of house before it could be turned over to the new buyer. Still a lovely investment but “only” a $35k profit (minus the few bucks for interest they had paid).
\*\*Only $35K is not a bad profit, but a lot depends on all what was needed to the house if anything. Also renting houses can be a nightmare. \*\*
The first tenant was a pro, she stuck us with a $17K judgment with no way to collect.
I will give her credit, she left the house spotless at her expense. She coned the cleaning people. The last day she moved out they were there cleaning the carpet and cleaning ladies for bathroom and toilets and everything else. I had evicted her and I was there doing some out side cleaning and work while these people worked inside the house. When they were all out having a smoke they asked me why she was moving, I told them she was evicted and they were not happy. The carpet cleaners laughed, she still owed their company from the last carpet cleaning. I will never forget Alice Brewis
We had good and bad tenets but over all people did not respect our property as good renters should do.
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### Author:  [@Corry\_El](https://boards.straightdope.com/u/Corry_El)
#### Post date: [April 30, 2016, 2:28pm UTC](https://boards.straightdope.com/t/what-are-the-benefits-of-paying-off-your-house/753211/84 "2016-04-30T14:28:41Z")
> [@md2000](#):
>
> The keyword right there is “averaged”. If you are a confident and crafty market player, then by all means mortgage the house to the hilt and play the market. If like me, your investment process is “buy the better mutual funds offered by your bank” then maybe a mortgage is a better investment.
Yes, ‘averaged’ is the key word in that it equates to what I said in different words, risk. Stocks have a higher expected return than mortgage rates, but risk it will be a lower return, or a loss.
The part I don’t agree with is ‘crafty market player’. It’s a fools errand for the vast majority of people to think they are going to beat stock index returns by being ‘crafty’. The wise way for 99% of people to invest in the stock market is low cost index funds, buy and hold. That has historically given a higher return than mortgage rates, and would be expected to from now. However there’s no guarantee, there’s risk stocks will crash, and no gtee they’ll bounce right back like 2009 to the present. There’s always that risk, and no ‘crafty’ way around it, no matter what you hear people (typically with a vested interest in selling you a method or high cost investment) say to the contrary.
But as another post noted, a large mass of people with enough income to save have mortgages but put some of their savings in the stock market, rather than use the money just to pay down their mortgage faster than the terms require. Those same people would often recoil at the idea of borrowing money to invest it in the stock market, but it’s basically what they are doing. And again it’s not wrong or right per se. It’s a matter of need and tolerance to take more risk to reach financial goals.
Also in the US there is a significant tax benefit to investing money in tax deferred saving plans like 401k, IRA, etc. In the 401k case the employer usually also matches some of the contribution. You don’t get that tax benefit, and are just leaving the matching money on the table, if you don’t sign up to have some of your salary diverted to the 401k but instead pay income tax on it now, take home the net, and use it to pay down your mortgage. Giving up 401k match just to pay down a mortgage is probably a bad decision. When it comes to taxable savings beyond the limits allowed for a 401k, then it’s more of a personal risk/return trade off to pay down a mortgage faster or invest in stocks instead.
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### Author:  [@TommySeven](https://boards.straightdope.com/u/TommySeven)
#### Post date: [April 30, 2016, 9:04pm UTC](https://boards.straightdope.com/t/what-are-the-benefits-of-paying-off-your-house/753211/85 "2016-04-30T21:04:43Z")
> [@watchwolf49](#):
>
> Disclaimer: I write off _all_ my mortgage interest through my company, _and_ claim standard deduction off my personal return … talk about double dipping hahahaha
Why are you able to do that? The interest for a mortgage on your home wouldn’t generally be a business expense, except maybe for the part that qualifies for a home office deduction.
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### Author:  [@Voyager](https://boards.straightdope.com/u/Voyager)
#### Post date: [April 30, 2016, 9:23pm UTC](https://boards.straightdope.com/t/what-are-the-benefits-of-paying-off-your-house/753211/86 "2016-04-30T21:23:36Z")
> [@TommySeven](#):
>
> Why are you able to do that? The interest for a mortgage on your home wouldn’t generally be a business expense, except maybe for the part that qualifies for a home office deduction.
There is one gotcha in doing the home office thing - the percentage of your house representing your office is not covered by the exemption you get for making money from your house, but is counted as income. We ran into this when we sold in NJ, but luckily our profit was not all that great. If we had done it here in California we’d be extremely screwed when we sell.
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