My girlfriend got some family money and is planning to buy a house. She has the money to purchase the house outright with cash. But she is thinking of putting 50% down and get a mortgage for the remainder. Ostensibly to get the home owner's interest tax deduction.
I am arguing that it's better to pay the whole thing off, because whatever interest she can deduct on her taxes is unlikely to be more than she would pay as a part of the mortgage.
Am I wrong? Am I overlooking some other benefit?
This is a strictly monetary question. For the moment, I am putting aside the hassle of having a mortgage.