All the Interest is Up Front

All the Interest is Up Front

He said, “Marriage is a lot like a mortgage – all the interest is up front.” He followed that with the lament “I can’t get a divorce; I like my house.”
It was a wonderful evening, and I highly recommend the act, but I can’t get the line about all the interest up front out of my head.

How many times have you added up your tax deductions for medical expenses, only to find you may as well take the standard deduction, making all that effort keeping receipts a zero-sum game. But not when you have a mortgage.

When you have a mortgage, the interest will usually get you over the standard deduction line and now all the other deductions count. Your car interest, your donations, your prescriptions are now all tax-savings items.

Here’s the part where I say, “I am not a tax preparation professional” and yes, you should consult with one before you get in dutch with the IRS.

But generally speaking, mortgage interest is a blessing. Let’s face it, if you aren’t paying for a home, you are throwing away money on rent.

Equity is the difference between what you owe and what your house is worth. Equity, for most of us, is the only true wealth that we build over the years. Although values may cycle up or down, over time your house is one of those few things you own that appreciates. Your car doesn’t go up in value. Your furniture isn’t worth more today than five years ago. Only your house goes up in value. Plus, you get to enjoy it. You get to take pride in it and fix it up. Well, some of that can be a drag. But if you want new counter tops or wood floors, some of that expense adds value. New tires on the pick-up truck just don’t make it worth more.

So, all that interest is up front, but you get a tax deduction now, appreciation over time, and later on, that mortgage balance starts to go down and you build even more equity.
That is why they call it the American Dream.

I don’t know if marriage can match that. One of the ladies in the audience was on her sixth journey of matrimonial bliss, but I’m with him – I like my house.

May you all find happiness with that special someone, but when you want to find a house, give me a call @ 602-796-5751. I ‘ll hook you up with a lender, get you a mortgage, and help you build wealth through home ownership.

    – Joseph Callaway