Quote:
Originally Posted by Dadhawk
You are forgetting the part where Person1 in your example has a paid for house for 15 years, eliminating a huge risk in their life (they now have a roof over their head regardless of what else happens except straight up financial collapse on their part) and that completely changes how you do things, and how you sleep at night, and it creates flexibility.
For example, if both want to move at year 16 (or year 5 for that matter), there is a major difference in the amount of equity available to roll into a new house.
Each person has to decide for themselves what the long-term goal is, and what they are most comfortable with in the long term.
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This is true. It is all in what feels best. Some might want to have a home paid for in full after 15 years, something they may be able to liquidate if necessary. Others may want to have partial equity to liquid and have 15 years worth of investment/savings, and those same would be horrified of the idea of not havings savings. It all depends.
The reason why the rich get richer is because they can just do what results in the most money most of the time. Surprisingly huge companies like Walmart borrow money all the time to invest in projects instead of paying cash when they have the cash to spend. Why? Because it is better to invest with someone else’s money, so that’s what they do. Likewise, it is best to take the 30 year loan and invest using “someone else’s money”, but I can see your perspective.