And interest-only mortgages, like a 10/1 arm, gives you a fixed rate for those 10 years, lower than a customary 'fixed-rate mortgage' rate, and importantly gives you a very low payment so you have much more present cash flow to put to work in investments, and the whole payment is 100% deductible. At low rates, and I have a 3%, they are a little higher now, over time you will certainly perform better than that mortgage rate thru investments like a 60/40 stock to bond ratio. You just never let it get past the 10 years before refinancing or moving, cause then, yeah, the rates can jump. So compared to a conventional fixed mortgage, perhaps instead of paying down, e.g., $50,000 in principal, you've made an additional $60,000 in your investments AND you have, say, $12,000 of deductions on top of that. Paying down principal compared to investing the difference is psychologically good-feeling, but not the best for your financial health when interest rates are relatively low. Of course, this shouldn't be done during periods of high interest - the odds, over time of easily outperforming your mortgage rate is much more questionable!