If people can pay off their house right now why do they keep refinancing it? why dont they just pay it off?

Ashly
i hear there is some sort of tax difference, what is the difference in taxes?

Belva
If you pay $5000 in interest for instance and you are in the 30% tax bracket the government reduces your tax by about $1500. It means that when your mortgage note says you are paying 6% interest you may only effectively be paying 4%. So the mortgage on your house is often the lowest effective interest you can have and the tax free capital gain is another tax incentive to buy a house.But anytime you borrow money you are paying interest and living off borrowed money is not a wonderful thing.If I was able to pay off all my debts and live on a cash basis I would much rather do that than borrow at all. So I would vote to pay the mortgage off no matter what the tax advantage.

Peggie
The tax benefit still remains although who knows for how long. If the taxes and interest exceed the standard deduction, it can be deducted from your income tax.For a lot of people it makes sense to refi the house (making the interest deductible) and paying off "bad debt" such as credit cards or car loans. Many others use the money to launch a business or to put back in their home in the form of remodeling, etc. The reasons are endless, but the benefit is the same.

Alice
Some people want to do improvements or pay for kids college or other expenses andThe % on the HELOC or Refi is cheaper than the alternatives .Also, % on HELOCs and Refis are tax deductible where other loan % is not .OR a few people have found investment returns that exceed the % rate on the Refi and earning the $$$$$ on the difference .>

Jerrod
That is an individual decision. For some people, it makes more sense to keep the cash liquid rather than put it all into the house equity.

Claudie
It's the fastest way to get a loan.