Per WEB's With the U.S. mortgage interest tax deduction (up to $750K I think for a couple), the effective rate might then adjust to a net of 5%." - a slight clarification.

The standard US deduction was spiked to @$25,000 a few years ago as part of that tax bill. That means that the benefit of carrying a big mortgage interest load was decreased. My mortgage interest + property taxes before then (200K mortgage, 3.7%, @25 years left) was enough to itemize deductions and realize that full benefit of mortgage interest.

Now, I get that much larger deduction automatically (because I'm not close to having >$25K itemizable) - so, the more I *minimize* expenses, the better.

Just remember that banks don't lend you anything without some kind of income - so if you burn down your savings too closely to pay off the mortgage, but have limited income, it makes it very hard to get a loan in case you need emergency cash. Stock is liquid, the house isn't.

The apparent end (?) of ZIRP makes this judgement call much harder to make, IMO - expensive debt eliminates the net return margin we have gotten for years investing in stocks.

FC