The Psychological Cost of Mortgage Debt as a Liability

A homeowner who pays off their mortgage early removes the obligation to pay for shelter. This is a result of the idea that mortgage debt, while often termed 'good debt' because of home appreciation and the fixed-rate nature of 92% of U.S. mortgages, is still a liability. Rachel Cruze and Dave Ramsey argue that the mortgage is a liability that creates a psychological burden of the responsibility of carrying it. Cruze notes that the argument to invest excess cash in the market for 10% or 11% returns rather than paying down a mortgage is flawed because a person who owns their home outright would not borrow against their home to invest in the market. The process ends when the homeowner owes nothing to any other party.