Why would a CFP recommend mortgages?  Financial planners may be segmented by licenses and inclinations to promote stocks, insurance or realty, but this segregation ignores the long-term interests of clients who may need financial strategies that mix asset classes.  My CFP training failed to show CNBC reports that, in 2019, the median net worth of homeowners in the U.S. was $255,000, while renters had a net worth of $6,300. This is a difference of 40 times between the two groups.  Realty should be in everyone’s plan.

Renters pay a little less for rent than for mortgages, have greater flexibility of lifestyle, and avoid maintenance and property tax costs–but few are likely to invest differences in the market well enough to match house payments which are virtually forced savings programs.  Homeowners pay down mortgages over time and benefit from leveraged investments.  Many Californians retire free of mortgages and pass on a legacy of houses tax free with stepped-up basis for their children.

Investopedia reports that “From March 1980 through September 2023, the U.S. housing market’s annualized average growth rate was around 8.6%.”  If you borrowed $600,000 at 4% to buy an $800,000 house, the appreciation is 8% of $800,000 which means the house doubled to roughly $1.6 million in nine years while paying loan interest of about $300,000.  So you turned $200,000 into $500,000 with returns over 15%.  Opportunity knocks as rates are falling.