Benefits and Dangers of a Mortgage

If you like me -- the idea of paying a mortgage for the next 30 years is an unsettling thought to say the least. People tell me that there are good debt and bad debts -- head and gut tell me that a mortgage is a form of good debt.

There are lots of advantages of having a mortgage but the enormity of the debt reflect just how crazy our world have become where one must pretty much indentured themselves to a property as a way of life. This is somehow normal. The cost of living especially in California is completely out of balance. The costs of a home is simply out of reach for most people - not just young professionals and people early in their career.  However - if you are ever able to afford a home, here are some ways that I found a mortgage to be useful (generally over renting):

Benefits of a mortgage:

• Stability - 
• The terms and interest rates are usually fixed, so you know exactly home much payment is required each month
• As long as you are able to fulfill your financial obligation, you don't ever have to worry about moving.
• Pay less in taxes
• The mortgage interests are tax deductible, so you pay less in taxes to the government, while building equity in your home
• Access to cheap money
• Equity in your home can be a source of cheap money where the interest rates are lower than other type of debt such as personal loan or credit cards

Dangers of a mortgage:

• Being under water
• Home values can fluctuate depending on broad market forces - if your home is under water, you may end up paying higher than market rate for your home and not be able to move. No one likes to pay more than retail for a place to live. 
• Higher costs than renting
• While the monthly mortgage is the same for the life of the loan -- the costs of living is higher for us each month compared to renting. However, this may change in the long run as the costs of renting are likely to increase over time. 
• While renting -- our rental rates would generally go up about 2-3% per year. This amount adds up over time, especially when our kids arrived -- now we have to account for an extra person which costs additional in rent.
• Maintenance and Repairs
• Life happens and now you are responsible for fixing all of the broken things in your home: plumbing, paint, windows, gardening, roofing etc. you name it - you are are now responsible.

Now that I have a mortgage and been paying it off for several years -- I am inclined to pay it off as fast as possible.