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I’ve Got to Pay Off the Mortgage! Why??

Well over 70 years ago a mortgage was something whispered about because owning a house without a mortgage was the financial goal that everyone was encouraged to aim for. Of course I have a mortgage – but it never goes down. Why?

I arranged a loan to buy the house with a line of credit that in those days was about 80% of the cost of the house. At the same time I made an investment – NOT in real estate – which created an income stream that slightly exceeded the interest payable on the line of credit (AKA “the mortgage”).

In the intervening years the line of credit has neither gone up nor down either. The investment that funds the interest payment has quadrupled and of course the value of the house has increased by a factor of about 500%. That last bit is irrelevant to me but the kids may think it’s OK.

The opportunity cost of $1 million invested in your mortgage free house ranges upward from $1,000 PER WEEK!

I make my house work for me, and not the reverse.