Mortgage lending rates continue to hold multi-decade lows. Could they continue to hold these lows through 2012? We wouldn't be surprised. On the other hand, we don't see much impetus for rates to go much lower either. We ask rhetorically, why procrastinate?

We also see little reason not to borrow to buy. A borrower who takes a 30-year fixed-rate loan at 4 percent is looking at an after-tax cost of 2.875 percent, assuming a 28 percent marginal income tax rate. That same borrower who assumes a 15-year fixed-rate loan at 3 percent is looking at an after-tax cost of 2.16 percent. Both rates are below the annual inflation rate of 3%. It's almost like interest-free money.

What's more, tying a large sum up in owner-occupied real estates means tying up money that could be put to more profitable use. If a buyer puts 20 percent down on a $200,000 home, that means financing $160,000. If a buyer pays cash, he or she no longer has use of that $160,000. That's money that could be used to buy cash-generating investments, such as dividend-paying stocks and rent-generating investment real estate, that yield two or three times the borrowers net interest-rate costs.

In short, tying an excessive amount of money up in real estate when cheap financing is available means enduring a possibly high cost of foregone investment opportunities.

Courtesy of Jessica Regan.

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