Respectfully, you're effectively describing the argument I take issue with.
> Now I understand that mortgagees are non-callable.
How are you defining non-callable? If you stop paying on your mortgage that sent will eventually be called and you will be kicked out.
> If you put 20% down that removes a lot of risk of being underwater
That removes the risk of being underwater for any market correction sub-20%. Real estate prices in any areas have grown more than that ovwr the last few years, the risk of a 20%+ correction is on the table.
> With a 30 year mortgage you can get a smaller payment
And a 40 year loan would be even smaller. Where do we draw the line, and why? 30 year loans weren't always the norm, you don't have to go too far back to find an average mortgage on 10 or 15 year loans.
> When you're older you're earning more, might be an empty nester, and inflation has made each payment easier.
Income doesn't always move up, and inflation only makes payment easier if you (a) secured a fixed rate loan and (b) stay in the same home long term.
> By not rushing to pay off low interest debt you've effectively transferred money from 50 year old you to 30 year old you.
Or if it doesn't work out, 30 year old you has a home at the expense of 35 year old you.
> If you stayed employed
That's a big if, and you not only need to stay employed, you need wages to at least keep up with true inflation. Your 401k won't matter until you are at an age where you can withdraw, or we have another pandemic-style response where we allow people to cash in 401ks without the early withdrawal fees.
The people in the camp of payoff early often highlight the emotional safety of paying off the debt…
But that logic never made sense to me, because homes are always callable: if you stop paying property taxes, Thats not your house any more.
If house burns down, Thats not your house any more.
Safety comes from optimizing your wealth for size and liquidity.
The person that kept things liquid, leveraged into the stock market 401k etc will be much better in a catastrophic event (job loss, flood, etc) than the person that has less liquid assets and a property tax payment due.
> Now I understand that mortgagees are non-callable.
How are you defining non-callable? If you stop paying on your mortgage that sent will eventually be called and you will be kicked out.
> If you put 20% down that removes a lot of risk of being underwater
That removes the risk of being underwater for any market correction sub-20%. Real estate prices in any areas have grown more than that ovwr the last few years, the risk of a 20%+ correction is on the table.
> With a 30 year mortgage you can get a smaller payment
And a 40 year loan would be even smaller. Where do we draw the line, and why? 30 year loans weren't always the norm, you don't have to go too far back to find an average mortgage on 10 or 15 year loans.
> When you're older you're earning more, might be an empty nester, and inflation has made each payment easier.
Income doesn't always move up, and inflation only makes payment easier if you (a) secured a fixed rate loan and (b) stay in the same home long term.
> By not rushing to pay off low interest debt you've effectively transferred money from 50 year old you to 30 year old you.
Or if it doesn't work out, 30 year old you has a home at the expense of 35 year old you.
> If you stayed employed
That's a big if, and you not only need to stay employed, you need wages to at least keep up with true inflation. Your 401k won't matter until you are at an age where you can withdraw, or we have another pandemic-style response where we allow people to cash in 401ks without the early withdrawal fees.