We are building a detailed list of frequently asked questions.  Here are the ones we encounter most often:

1.  Why would I want to pay off my house?  It's one of the only tax deductions I have that saves me money? 

This probably the question we are asked most.  Much of it arises from faulty understandings of the tax deduction.  In fact, in a recent dicussion with friends, they honestly believed they were getting dollar for dollar tax returns for what they paid out in interest on their home loan.  The truth is that if you optimized your financial picture to take the fullest advantage of the tax advantages for your interest payments on your house, the most you could hope for is 35 cents on the dollar.  Given that information, let's paint a hypothetical picture that will illustrate the point.  Here in Hawaii, we often find people paying $2400 a month or more in interest per month.  So if a person was optimized to take the fullest advante of this tax deduction, they would be getting back $840 in return on their taxes of that money, while the remaining $1560 is lost forever in interest.  It seems fairly logical that throwing away $1560 a month to a financing company so you can have $840 a month in returns doesn't seem as practical.  We won't even go into the amount of time and labor that are spent to keep these 'returns' coming. 

Now we all have to pay interest on our home loans, and we all should take the fullest advantage of the tax breaks we are given.  But to not pay off your home over time and own it free and clear only for this deduction and benefit, isn't really a benefit financially.  Paying off the home loan and then using your equity for wise and strategic investments with professional and proven experts would be much more beneficial.  For others, just having their mortgage paid off is enough of an incentive.  But if not, you can strategically invest your equity. 

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