Hello,
About a year and half ago, I took out
a 80-15-5 loan.

I paid 5% down to purchase the house. Then
80% of the loan is a 5-year ARM. The remainder
30% (amounts to about $33K) is in line of
credit in which I pay market+2 % interest.

I was wondering if I could benefit by paying
off the small loan ($33K at market+2 interest).

Would the interest I pay be deductible in this
year's taxes?

Please advice! Thanks

On 3 Nov 2004 11:50:47 -0800, someone wrote:

I was wondering if I could benefit by paying
off the small loan ($33K at market+2 interest).

Why, sure. You wouldn't have to pay the interest on it.

But, what interest or dividend income would you be giving up to use
those funds to pay off the loan? Here come the flames! Yes, the
interest deduction somewhat reduces the "net" cost of the loan. But
then the obligation to pay is like a "sure thing" whereas your
interest or dividend income is typically either uncertain or very low.

Me, I'd likely pay it off. I have other leveraged income producing
assets, that's where I use leverage, not on something that's a
consumer cost like one's own home. But there are others who believe
in maximum leverage on their own homes.

-v.