Kirstin Downey should have talked to a few financial planners for her May 28 front-page story, "Many Buyers Opt for Risky Mortgages." The smart ones do not suggest storing dollars in home equity.

Here are a few money facts to consider:

* Dollars of home equity earn zero percent rate of return; the property value is what appreciates or depreciates regardless of the owner's indebtedness. Value appreciation is what accounts for the greatest increase in ownership, not chipping away at the balance.

* Since 1980 homes nationwide have appreciated 5.1 percent annually on average.

* Mortgage interest represents most Americans' largest tax deduction for shielding earned income. The more interest you pay, the more the government helps pay your house bill.

The cost of money is always relative to the return on other investments.

Ms. Downey painted a Chicken Little scenario combining a "bubble" collapse among homeowners with no or little equity. We're due for a price correction, yes, but that's a far cry from people, even those with interest-only mortgages, losing their homes.

I agree that unethical bankers and brokers use interest-only mortgages to enable some high-risk borrowers to sneak across the qualification threshold. I'd also agree that interest-only mortgages are dangerous in the hands of "spenders" who max out every debt in their lives. But that's blaming the spoon for obesity.

In general, interest-only mortgages are a smart financial choice for the financially astute -- those who understand dollars stored in bricks-and-mortar equity earn nothing; that paying down your balance decreases your biggest write-off for protecting more of your income; and that the cost of money is always relative to the compounding return you could be getting by sending each dollar into a conservative investment vs. socking it into your loan balance at zero percent return on investment.



The writer is a mortgage banker.