Once you sign on the dotted line you owe the principle balance. The only thing you can control is how much interest you pay. This is why no matter what the debt is, you want to pay it off as quickly as possible. Every penny you pay in interest is a penny you’ll never see again. When the debt is for things of value such as a house, avoiding interest means tying your money up in equity. It’s not gone, it’s just not liquid. You don’t have immediate access to the money if you need it. But, it wasn’t your money to begin with. Remember that dotted line you signed? If you wanted the cash in hand rather than in equity you shouldn’t have bought that house. Equity is not a piggy bank. It’s simply the value assigned to a product.

You can either sell the house and get the cash in hand. Or you can take another loan out against the value of the house and pay it back with interest. Why would you want to pay interest on your house twice or more?

The most over sold excuse for not paying your mortgage off ASAP is that the interest you pay is tax deductible. There are two problems with this. The first problem is that $10,000 is already deducted from your taxes automatically if you don’t do itemized deductions. If you itemize deductions (thereby being able to take off the interest paid for your home) you must have paid more than $10,000 in interest to come out ahead. A home loan of $160,000 at 7.5% with the minimum payment will have more than $10,000 in interest for only a year or two.

The second problem is that it is a tax deduction. You only save your tax rate times the amount of interest you paid. Rather than saving the total amount of interest you save (the amount of interest you paid - $10,000) * your tax bracket. Because $10,000 was going to be deducted anyway.

Interest is never worth paying. Tax deductions are a break for the inevitable. Not something to seek out. You’re aways better off simply not spending the money.