You are of course not wholly wrong. However, people paying on the latter half of a 30 year mortgage are almost certainly paying much less for housing than they would be paying to lease, due to inflation. And of course these payments are increasingly equity-weighted.
I think it’s going to be futile to argue with you (partially because you’re correct in the technical sense) but I’ll give it one shot.
Imagine you have 20 million. Should you buy a million dollar house outright, or get a mortgage? Look at the prime rate today and compare it with expected market returns over the life of a mortgage.
This is without even considering the ground reality of renting a place (which is the common alternative), where rents are liable to rise perpetually, and without considering a plethora of other factors which contribute to calling a mortgage an asset.
Of course, if you can get by without needing to pay for shelter at all, you should do that.
The whole point of accounting is to force black and white distinctions, especially in ambiguous situations. But in fact there is no ambiguity about this. Owing someone money doesn't earn you money. Owning an asset that you may have acquired with a loan is what earns you money.
I totally agree. I'm making the narrow point that a mortgage is a debt, and classified as a liability. A house is an asset. The benefit of purchasing real estate with leverage vs cash doesn't change how they sit on a balance sheet.
Personally I argue to everyone they should put down as little as possible for the reasons you're stating.
Only if the interest rate is fixed, right? Is it common for mortgage interest rates in the USA to be fixed at a set percentage for the life of the loan?
And this is one of the relatively few situations that work out in favor of the consumer. With most mortgages, you can refinance to a lower interest rate--perhaps with some associated costs--if rates go down. But if rates go up, you're locked in with a fixed rate mortgage.
