Is Mortgage a good Debt
A mortgage means you can live in your house even though the bank, and not you, owns part of it. A mortgage gives you tax benefits as well. And a mortgage gives you the luxury of not having to pay for your house all at once; so you can take the money you would have had to pay and invest it for a higher rate of return than the rate of interest you're paying on your mortgage.
Say your mortgage costs you $600 a month. Take another $50 a month and save it. That's $600 a year.
If you invested that $600 over 30 years, the life of the typical mortgage, at an annual compound rate of 10 percent, you'd have $113,966.27.
At the same time, you'd be living in the house and, most likely, watching its value grow over time. So, it's pretty clear that a mortgage is a good kind of debt to have, as long as you can comfortably afford the payments.
Say your mortgage costs you $600 a month. Take another $50 a month and save it. That's $600 a year.
If you invested that $600 over 30 years, the life of the typical mortgage, at an annual compound rate of 10 percent, you'd have $113,966.27.
At the same time, you'd be living in the house and, most likely, watching its value grow over time. So, it's pretty clear that a mortgage is a good kind of debt to have, as long as you can comfortably afford the payments.