30-year Mortgage: "The Best Instrument in the World"

Posted by Emma Johnson on 5/3/17 9:30 AM

Topics: Home Buying

If you’re on the hunt for sound financial advice, your ears should perk up when you hear from billionaire American investor Warren Buffett, who’s proven he knows a thing or two about real estate and money management. His advice to Americans looking to grow their wealth? Buy a home. Particularly if you’re looking to put down roots and stay awhile.

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Recently, on CNBC’s show On the Money, he recounted the days spent at their family vacation home in Laguna Beach, California. A home which is currently on the market for $11 million and was purchased for a mere $150,000 back in 1971. While the billionaire certainly had the means to pay cash for the property even back then, he instead took out a 30-year mortgage.

Why? Because instead of an all-equity purchase, he chose to invest his money in his growing business, Berkshire Hathaway. Not only that, but perhaps most importantly, he believes that a 30-year mortgage is "the best instrument in the world”. Rates are still low, but if they ever go down more, you can pay off the loan at a lower rate. Buffett goes on, “It's a one-way renegotiation. It is an incredibly attractive instrument for the homeowner, and you've got a one-way bet."

Homeownership continues to be the right decision for many Americans looking to grow their personal wealth while providing stability and comfort for their families.

Watch the full interview here.

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