Home buying as retirement planning
The math works like this. Let’s say we know twin sisters, Betty and Carol, each with similar jobs and comparable incomes. Both are in the market for a new home. Spurred on by her real-estate agent, Betty buys a cavernous estate home valued at $850,000 and puts down $50,000 at closing. A 35-year-old, she plans to pay off the $800,000 debt by working hard and pinching pennies over the term of her 30-year mortgage. It’s more house than Betty needs, but she reckons it’s her ticket to retirement on easy street. Carol is more cautious. In the same town, she acquires an average-size home valued at $350,000, also putting down $50,000 and financing the balance with a $300,000 mortgage.