4 ms·
> Why get a 30 year mortgage at 40, to only pay it off at 70 and then die in two decades? 1) Inflation hedge. 2) At some point in the next 30 years, you will b
by NDizzle 3y ago
> Why get a 30 year mortgage at 40, to only pay it off at 70 and then die in two decades?
1) Inflation hedge.
2) At some point in the next 30 years, you will be able to sell your home at / above what you paid for it, just due to the cyclical nature of things.
I'm not saying real estate always goes up... but for example, I bought at age 41. $515k. Current estimated value, $900k. When the kids are all graduated and out of the house (when I'm 53-54ish) I can sell this, buy something outright in cash, and increase my saving rate from ~35% to about 60% without any change in my current standard of living.
- ryandrake 3y agoThere's also the tax benefit of mortgage interest vs. rent payments. Granted, not everyone itemizes, but it's there.
- nradov 3y agoThe increased standard deduction in the most recent federal tax overhaul made it pointless for a large chunk of middle-class homeowners to itemize.
- scaryclam 3y agoI think the idea of being able to downsize (or stay where you are after paying your mortgage off) is underrated. Going into retirement with no big outgoing costs for housing outside of insurance and maintenance is a big upside of owning a house (I'm not in the US, so no property taxes either). You don't need to make a profit on a home for it to pay off longer term. Having a pension that can cover living costs while NOT having to also cover rent gives a lot of security. While it's also an option to get cheaper rent and put the difference into another investment, rent costs are hard to predict, so I'd rather not end up worrying about it later in life.