BooksAreNerdy- The simple way to think about it is if you have a mortgage at 4% and your investments earn 7%, then it is pretty easy to see that putting more money into the bucket that gets you 7% vs. 4% is going to be advantageous. I put together an Excel workbook to show this. But what a lot of people miss is that in a point in the future you could liquidate some of your investments and payoff the mortgage and still have a chunk leftover. Check out the workbook and let me know if it clarifies or confuses.

Mostly clarifies, but I feel like I should add some more specifics to our particular situation as the workbook just can't address all of my various ins and outs. Our current house is on the market, its sale would leave us about $130-150k cash. We are looking at houses in the $100k range for our next purchase, as this range allows the house to be quite livable for our family or a future rental/investment should we ever desire it to be such.

DH is planning to retire in 6 years at age 38. We aim to have enough in taxable accts to hold us over for 20 years, and then enough in retirement accts to last indefinitely. We would also like to have a total of 3 houses in this 80-100k range, one for living and two for rentals.

DH is of the opinion that we want to minimize our costs/payments in retirement. So, he would rather have a paid off house and paid off rentals. DH's argument is than in a downturn, you want to be withdrawing as little as possible from investments. ie, have low enough expenses that you could easily use a side hustle to pay the bills. So, he would rather pay cash up front and make sure our expenses are low when we hit retirement. I, otoh, am trying to figure out the exact math of which is better. Funny enough, he is the engineer and I am the english lit major. So, I do appreciate the hand holding as I struggle with the math. :)

One thing in my post above that I didn't think of, was that if we didn't have a mortgage, we likely wouldn't budget an extra $477/mo (or $382 in the case of an 80k mortgage) into our post retirement budget to invest instead of making a mortgage payment. So, that investment benefit goes away.

Scenario A, no mortgage:

Pay $100k cash for house

$382/mo is invested (vs spent on mortgage payment) for next 6 years, netting $35k. Untouched, this would grow to $177k over the following 24 years.

Scenario B, mortgage:

Pay $157k for house; $20k down, $80k principal, $57k interest.

Invest $80k and take out a monthly withdrawal of $382 to cover monthly P&I. At the end of 30 years, this acct is worth $183k.

In Scenario A, you end up with a value of $100k+$177k=$277k in home cost plus investment growth.

In Scenario B, you end up with $100k+$183k-$57k=$226k as your total value from home cost plus investment growth, minus mortgage interest paid.

So, in this situation, it looks like NOT having a mortgage would actually be a better move financially, as you would end up with an extra $51k at the end. Does that seem right? It isn't exactly comparing apples to apples as I had originally posted, but it gives more of a real life example.