In any year you could earn a lower return on your investments, or even lose money. You have the same option when determining the length of your mortgage or whether to prepay your mortgage. If you choose the higher payments of a shorter mortgage or prepaying your mortgage, you are foregoing the opportunity to invest that money and possibly earn more than you would save in interest costs. In the meantime, they would have had a much larger mortgage interest deduction that reduced their taxes. They would have also had the flexibility of smaller monthly payments in the event of an emergency such as disability or loss of employment.
Some people complicate the mortgage issue by considering the potential appreciation of their home.
They are separate issues, don t confuse them. Your home appreciates the same regardless of how much equity you have in it. In fact, if your home does appreciate, you earn a higher rate of return on your investment if your down payment is lower. Carefully compare the cost of mortgage insurance with the cost of a lower down payment. While a mortgage is very efficient debt, it should not be used recklessly.