I love the way Allan Roth puts it -- that it makes no sense to borrow at 4% on a mortgage and lend at 2% on a bond.

So before we take out this next mortgage, I want to think through this -- because it gets slightly more complicated.

**Mortgage:**

The builder incentivizes using their lender by giving $12k toward closing costs. That isn't "real" money, because their loans are overpriced. But I figure it is still worth about $7k. That isn't money that I can get as a discount on the house.

So if I use that -- and no more -- to buy down the rate, I'll probably be at 2.75% -- maybe 2.6, depending on where rates go over the next few weeks.

With other closing costs related to the lender (not counting the ones that I would have if I bought in cash), the effective rate over 5 years will likely come out to 2.8 or 2.9%.

(Excel can tell me exactly, once I have the exact numbers.)

Fixed Income:

Fixed Income:

Navy Federal has 5 year CDs at 3% right now. That's hard to beat.

**Taxes:**

Unless something changes, I don't expect to itemize. So that 2.75% mortgage really is 2.75% after tax.

Right now, I have my tax sheltered accounts full of other stuff. I could move these CDs into an IRA, but then I have to move something else out. So my inclination is to say that I should compare it to what 3% is in the after tax world. Since we are moving to a no-state-income-tax state, let's assume 24%. So 3% becomes 2.28%.

So if I look at this with a 5 year view, the math seems to say just pay cash.

**As an alternative**, what if I bought no points. Maybe even take negative points and see if they will allow me to apply the $12k toward things like prepaid taxes, transfer fees, title insurance, etc. (My guess is they won't.) That would get the house in my name and pay the fees -- after which I could pay the house off after x months.

Thoughts?