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Is a Mortgage a Good Debt or a Bad Debt?

Most of us were taught that debt is something to be avoided at all costs: that we should only resort to it out of absolute necessity. The truth is, not all debt is bad. Some forms of debt can be beneficial – the prime example being a mortgage loan. If the reality of long-term debt is causing you to reevaluate your decision to purchase a home, take a deep breath, keep scrolling and learn more about the positive qualities of a mortgage loan!

What Makes a Debt Good?

What makes a debt a good debt? Benefits of good debts include:

· Improving your credit score

· Tax breaks

· Equity

· Return on investment (ROI)

Luckily, a strategic investment made in a home can provide these benefits and more!

Houses Gain Value

While the interest paid on a home is significant, it’s still a good investment for people seeking long-term wealth. The mortgage itself is worth just about as much as the asset. Furthermore, the asset is scarce (and only getting scarcer) and has the potential to appreciate over time. Historically, the returns on real estate are worthwhile in the long-term: specifically, when looking at data over a period of 7 years.

Owners Win, Renters Lose

Owners gain more equity each month as they pay off their mortgage. To many people, this benefit outweighs the pros of living in an apartment or other rental property. After all, you’ll need somewhere to live no matter what, and monthly rent in any rental property is money lost. Homeowners also have the benefit of being able to use their equity as leverage for other loans, such as a home equity line of credit.

Low Interest Rates

Mortgages – especially recently – can come bearing incredibly low rates. The industry average is currently around 4% which is historically low and still considered a bargain at the time of this publishing.

Tax Breaks

There are several tax deductions that homeowners can take advantage of. To name a few:

  • Mortgage interest – This is usually the biggest tax deduction for homeowners since a percentage of every mortgage payment goes toward the interest on your loan.

  • Home equity loan interest – As long as you spend the money borrowed from your home equity loan on home improvements, interest paid on this type of loan can be deducted.

  • Property taxes – You can get a tax break for paying property taxes up to a certain limit.

  • Home office expenses – If you’re self-employed and regularly use part of your home during business hours, you can deduct home office expenses.

Enhance Your Life

A new home is guaranteed to be profoundly life-enhancing. Nothing quite compares to the level of creative freedom you have as a homeowner; to customize your home freely, and bridge the gap between your hobbies, lifestyle, and living environment.

Your new home will give you the opportunity to better control your life, from the moment you awake each day until the moment your head hits the pillow each evening.


The reality is that debt can absolutely serve you in a positive way. In the long term, investments like home mortgages can help you gain wealth and enhance your life. While a 15- or 30-year mortgage may be daunting, resources already exist that can help you manage potential debt, get the lowest rates possible, and make your path to home ownership go as smoothly as possible.

We offer an incredible set of resources here at Northpoint Mortgage, and you can speak with one of our loan officers today to learn more about the opportunity that is home ownership!

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