interesting range of views. If you buy instead of renting, you also get an increase in equity every time you make a payment. Rent is money down the drain. As far as tax deductions, you look at return on investment. The interest portion of mortgage payments return your marginal tax rate—25 or 33 percent, perhaps. I don’t know of any equity investment that does that so predictably.
The cost of the loan is whatever your mortgage rate is less the tax advantage. Then your house also might increase in value. That’s the real investment. You compare the rate of return on the house (less all fees), compared to the rate of return on another investment that you borrow money for to decide which is the best place to use money.
So you ask yourself, will I earn more gains if I spend my money on a house, or spend my money on other investments. The tax advantage probably doesn’t play a big role in it, except looks nice to most people.
Then, they say that the house really isn’t about investment. It’s about having a place to love. So, for me, it was better to spend the money on the interest in order to free up money to invest in the market. Interest cost me 5%, but I could earn 8% in the market. If my loan cost me 8%, and I was only getting 5% in the market, then I’d be busting my butt to pay off the mortgage.