Save! Start an emergency fund, pay off your debt!, Stick to a budget.  That’s what you’ll usually hear me say with my fabulously frugal fact of the day. Experts say Sometimes it’s actually BETTER to stay in debt. Here are three reasons why.

1. There might be a prepayment penalty. Most mortgages don’t have these. But when they do, you might not always know it. It could be as much as 3% of the outstanding balance. Check your contract before you pull the trigger.
2. If you’re not saving for retirement or your kids’ education, you should put money toward those first. The taxes are deferred, so you make interest on what you WOULD have paid the government. And mortgage interest is tax-deductible, so you get even more tax savings.
3. You might have to pay more taxes. In some places there’s something called a mortgage recording tax. You pay it whenever you open a new mortgage, and it’s about half a percent of the total principal.
   

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