Spring Homebuying in 2026 and the Case for Never Paying Off Your Mortgage

Summary

NerdWallet’s Smart Money Podcast

Episode: Spring Homebuying in 2026 and the Case for Never Paying Off Your Mortgage
Air Date: April 30, 2026
Hosts: Sean Pyles, CFP® & Elizabeth Ayoola
Guests: Kate Wood, Abby Badak Doyle, Ana Hel Hosky

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Overview

This episode covers two timely personal finance topics:

1. The shifting realities of the 2026 spring homebuying season—how mortgage rates, economic uncertainty, and geopolitical events are affecting buyer and seller behavior, and why the housing market isn’t playing out as predicted by early-year forecasts.
2. A deep-dive into the “forever mortgage” debate, discussing the pros and cons of never accelerating mortgage payoff, and whether leveraging long-term mortgage debt can be a smarter wealth-building tool than prior generations realized.

The episode blends real-time market data, expert analysis, practical tools, and some candid, relatable discussion on how emotions and life stage influence financial choices.

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Segment 1: Spring Homebuying Season in 2026

[02:45 - 11:13]

The Changing Spring Marketplace

• Spring as Peak Buying Season: Traditionally, spring signals the busiest real estate months each year.
• 2026 Disruption: Home sales are significantly down, mortgage rates remain above 6%, and consumers are hesitant due to global events (notably, the war that started on February 28th) and recession fears.
  • “As recently as February, it looked like this spring would be a back-to-normal kind of year for home buying. And that abruptly stopped when the Iran war began.” – Abby Badak Doyle [04:24]
  • NAR’s forecast for home sales growth was slashed from 14% to 4%. [05:10]

Market Data & Trends

• Existing Home Sales:
  • Down 3.6% from February to March, 1% lower than a year ago. [06:07]
• Buyer Psychology: Even minor rate improvements didn’t prompt a surge in activity. Uncertainty trumps marginal gains.
  • “The psychological impact of 30 year rates moving below 6%...I would have thought it would have motivated more buyers.” – Kate Wood [06:20]
• The Role of Perception:
  • Dual financial pressures
    • What’s actually happening (high prices, stagnant incomes)
    • Fears of what might happen (recession, job losses)
  • “There’s two kinds of pressure: the stuff actually happening and the stuff people think might happen next.” – Abby Badak Doyle [07:20]

Local vs. National Housing Markets

• No “one market”—local differences are immense.
  • Tight inventory in Northeast and Midwest; buyer’s market emerging in parts of the South and West.
  • “There isn’t just one housing market. This is really a collection of local markets, and those can feel really different from one another.” – Kate Wood [08:14]
  • Locals should consult agents for on-the-ground reality, not just national headlines.

Should You Buy Now?

• Advice for Buyers/Sellers:
  • If your budget/job security feels shaky, it’s smart to pause.
  • Waiting for perfect certainty is unrealistic; decide if you are financially and personally ready.
  • “Waiting for everything to feel perfectly certain—that’s just not realistic. If you’re trying to time the market perfectly, you might never make a move.” – Abby Badak Doyle [09:49]
• Takeaway:
  • The pace is slower, not stopped. Caution is high, but houses are still being bought and sold.
  • “Buying and selling houses is like getting married or having a baby...it never stops.” – Kate Wood quoting Holden Lewis [10:35]

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Segment 2: The “Forever Mortgage” Debate

[15:04 - 38:02]

Listener Question:

Is it smarter in today’s market to keep your mortgage as long as possible (“forever”) and invest elsewhere, rather than rush to pay down your home loan? [15:04]

Arguments for Forever Mortgage:

• Historically, investing in the stock market yields higher returns than most mortgage interest rates.
• Leverage: Using a mortgage lets you invest the bank’s money in a (hopefully appreciating) home.
• Inflation erodes the true cost of fixed-rate mortgage debt over time.
• The U.S. 30-year fixed-rate is unusually consumer-friendly compared to global standards.
  • “A 30 year mortgage is actually really long compared to the rest of the world...Particularly a 30 year fixed rate mortgage...is relatively disadvantageous to lenders and fairly generous to buyers.” – Kate Wood [17:14]

What is a “Forever Mortgage”?

[16:20 - 17:45]

• Staying with a 30-year loan, never prepaying principal, possibly carrying the mortgage into retirement.
• Not a literal infinite-term loan, just opting to not accelerate payments.
• “You’re not moving, you’re not selling, you’re definitely not trying to pay off the loan ahead of schedule.” – Kate Wood [16:25]

The Investment vs. Early Payoff Question

• Is the extra payment better deployed in investments or toward principal?
  • The answer depends on opportunity cost, expected returns, and risk.
  • “Could you make more money by investing a set dollar amount each month than you would save on interest if you were to put that same dollar amount toward paying off your mortgage?” – Kate Wood [18:01]

Opportunity Cost Analysis

• Historical S&P 500 returns (~10%) usually exceed mortgage rates (~5.5%), but the market is unpredictable.
• Calculator exercise with 5.5% mortgage vs. 10%/15% market return:
  • At 10%, even the interest “saved” by accelerating mortgage payoff is nearly doubled by total market returns.
  • “It does kind of feel like something where you could find a way to make the numbers tell you the story that you want to hear.” – Kate Wood [21:42]

Real Estate as an Asset

• Your home doesn’t always appreciate, and its value is highly local.
  • “Real estate, just like any other investment...is not guaranteed to simply go up forever.” – Kate Wood [22:32]
• Your primary residence is a “weird” or “solid”/illiquid asset. For some, the emotional satisfaction of owning outright trumps the math.
  • “Some people who are really intent on early mortgage payoff...the goal is really about, this is my home, and I’m going to own my home outright.” – Kate Wood [23:36]

Behavioral and Emotional Considerations

• The “forever mortgage” strategy only works if you consistently invest the money you save by not prepaying—“leakage” (i.e. spending it elsewhere) is a real risk.
  • “The main way [this strategy fails] would be spending that investment fund elsewhere...sometimes you know what, that might be intentional...Possibly, though, it could be more just sort of like, oh, I forgot, and this money’s right here in my account.” – Kate Wood [25:32]
• Life changes (kids, job loss, divorce) can disrupt strategy.

Risks and Blind Spots

• Not everyone will have the income to pay a mortgage deep into retirement.
• Even with your mortgage paid off, costs (property taxes, insurance) do not disappear. [27:43]
• You need a sophisticated investment plan, sometimes requiring professional help.
  • “You need to have a very sophisticated investment strategy to know that you're investing the right amount...I think this is something where you would want to really hire a professional to do this for you.” – Sean Pyles [28:14]
• Inflexibility and unforeseen life events can undermine both payoff and investing plans.

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Societal Perspective & Changing Attitudes

[30:22 - 33:48]

• Median age of first-time homebuyers is now 40; a 30-year mortgage could mean paying into your 70s.
  • “In 2025, the median age of first time home buyers was 40...if you’re taking out a 30 year loan and sticking with it, you are looking at celebrating your 70th birthday and paying off your mortgage.” – Kate Wood [30:24]
• Perceptions are cyclic: the 90s saw debt as “good”; after 2008, the mood turned anti-debt; recently, regulations improved and stigma toward mortgage has lessened.
  • “We're really not demonizing mortgage lenders and servicers the way that we were like 15 odd years ago...loan products that were pretty literally traps...are just not a thing anymore.” – Kate Wood [32:28]
• Having a mortgage can feel like a “bragging point” rather than a burden.

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Rapid-Fire: What Would YOU Do With $100K?

[33:51 - 36:08]

• Kate Wood: Would split between extra mortgage principal and investments, prioritizing retirement savings over accelerated mortgage payoff.

  • “We do always pay extra toward the mortgage principal...but I'm not at all interested in aggressively paying off our home loan.” – Kate Wood [34:27]
  • Notes that property taxes and insurance are ongoing even after the mortgage is gone.

• Sean Pyles: Also favors a balanced approach—prioritize living life, invest for future, but put a little extra toward mortgage when possible.

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Final Reflections:

[37:04 - 38:02]

• The emotional reality: there’s no single “right” answer. Not everyone will outlive their careful saving and investing; some peace of mind today is worth something too.

  • “Just a reminder...you need to live a little now because you can do all the right things financially and not even get to enjoy it.” – Elizabeth Ayoola [37:05]

• Party Line: NerdWallet generally does not advocate early mortgage payoff purely for the sake of it, but recommends reconsidering as retirement approaches, especially if you value risk reduction and peace of mind. [29:44]

• Key takeaway: It’s a highly personal decision—run the numbers, assess your risk tolerance and discipline, and decide what combination of security and opportunity best fits your life.

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Memorable Quotes

• “There’s two kinds of pressure: the stuff actually happening and the stuff people think might happen next.” – Abby Badak Doyle [07:20]
• “You’re not moving, you’re not selling, you’re definitely not trying to pay off the loan ahead of schedule.” – Kate Wood [16:25]
• “The main way [the forever mortgage strategy] fails would be spending that investment fund elsewhere..." – Kate Wood [25:32]
• “In 2025, the median age of first time home buyers was 40..." – Kate Wood [30:24]
• “You do need to live a little now because you can do all the right things financially and not even get to enjoy it.” – Elizabeth Ayoola [37:05]

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Timestamps for Key Segments

• Spring Homebuying Market Trends: [02:45 - 11:13]
• Forever Mortgage Debate Introduction: [15:04 - 16:20]
• Defining a Forever Mortgage: [16:20 - 17:45]
• Investment vs. Payoff Opportunity Cost: [18:01 - 21:42]
• Risks and Life Changes: [25:32 - 28:14]
• Societal / Generational Trends: [30:22 - 33:48]
• Personal Scenarios: $100K Decision: [33:51 - 36:08]
• Reflection on Balance, Life, and Peace of Mind: [37:04 - 38:02]

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Conclusion & Takeaways

• Spring Homebuying 2026: Market is not “cancelled,” but is slower and more locally variable than ever before; uncertainty is high.
• Forever Mortgage: The optimal strategy is personal. Mathematical arguments favor investing over accelerating payoff if discipline is high and circumstances are stable. Emotional comfort and life stage significantly influence the right choice.
• Actionable Advice:
  • Run the numbers with reliable calculators.
  • Consult local experts for housing market insights.
  • Cover financial basics (emergency fund, retirement savings) before making extra mortgage payments or extra investing bets.
  • Revisit your approach as retirement nears, or life circumstances change.

“Do what you want with your money and cover as many bases as you can. And don’t feel guilty about it.” – Sean Pyles [37:49]

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Next Episode Teaser

Combining finances before marriage—what to do, what to avoid. Tune in next week!

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For listener questions, contact NerdWallet Smart Money at 901-730-6373, email [e-mail], or leave a comment on Spotify or YouTube.

Transcript

[A]

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[B]

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[B]

The spring home buying season has traditionally been the time to rush into the market. But much like how our climate is changing, the annual ebbs and flows of the housing market are shifting, too.

[A]

Today we'll discuss whether the spring home buying season is still a smart time to get into the market. And then we're going to go deeper into the debate around the Forever mortgage.

[B]

Welcome to NerdWallet's Smart Money podcast where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Pyles.

[A]

And I'm Elizabeth Ayola. Later this episode, we'll be having a forever mortgage debate as requested by a listener. But first, our weekly MONEY News roundup where we break down the latest in the world of finance to help you be smarter with your money. Our news colleague Ana Hel Hosky is back to talk about home buying in the spring season. Welcome back, Ana.

[C]

Yeah, thanks for having me. As always, Elizabeth and Sean. Yes, spring is usually the busiest time of the year for the housing market. More buyers, more listings, more activity in general. But this year, things feel a little bit off. Home sales are down, mortgage rates are still hovering above 6%, and economic uncertainty is making people pretty hesitant to take on such a big commitment. So is spring home buying season canceled? To find out, we're joined by mortgage writers Abby Badak Doyle and Kate Wood. Abby and Kate, thanks for joining us.

[D]

Thanks for having us. Good to be here, Abby.

[C]

Let's start off with the big picture. Expectations for the spring housing market were pretty high. So why does the reality right now feel so different?

[E]

For the past few years, it feels like following the housing market has been a little like rooting for a long suffering baseball franchise. Like in the off season, there's this sense of hope, like things are looking up and then by spring, you're just back to that familiar sense of disappointment every year. I'm from Pittsburgh, home of the Pirates, so I've earned this take. But it's true though, like as recently as February, it looked like this spring would be a back to normal kind of year for home buying. And that abruptly stopped when the Iran war began on February 28th. And fast forward to now. The ripple effects from the conflict are showing up in the economy, from energy prices to financial markets. So. So now buyers and sellers are uncertain and it's going from being A vibe to showing up in the data. Based on the current market activity, or lack thereof, the national association of Realtors has actually scaled back its forecast of home sales for this year. So it now expects about 4% growth, down from 14% which was its forecast just a few months ago.

[D]

Dude, I so relate to the. Just like, oh, dang, gotta change my forecast. So I write a mortgage rate forecast every month and like, let me tell you how March went. So I handed in my draft on Friday, February 27, when things were looking so good. The previous day, Freddy Mac's average 30 year rate had officially moved low 6%. It was prime time. It was finally going to happen. And then the war began on Saturday. That forecast, like, I can't even say, like, oh, it aged like milk, because this was like no time. Like, this wasn't even like, oh, it took a week. This was like, you open the dairy product and you're already smelling it. Just like, I literally just bought this. Like, how is this so bad?

[C]

Yeah, it's pretty gross. So let's look into the latest numbers. Existing home sales have been a bit muted lately. They're down 3.6% from February to March, and that's 1% lower than a year ago. Okay, what are your thoughts?

[D]

So, honestly, I was a little bit surprised that existing home sales weren't a tiny bit stronger in March, just given where mortgage interest rates were in February. Home loans can take weeks to close. So, you know, a good number of March sales are going to be folks who locked their rates back in February. You know, rates were not dramatically lower back then, but the psychological impact of 30 year rates moving below 6%. I don't know. I, I would have thought it would have motivated more buyers. So some buyers might have even been waiting for rates to go lower and that certainly didn't pan out. So now, you know, prospective home buyers who are planning to begin their surges in spring might be rethinking those plans given like the current geopolitical climate, let alone the interest rate climate. Consumer confidence has really been sliding and that could have buyers as well as sellers choosing to sit out the spring home buying season.

[C]

Yeah, consumer confidence has just gone way down. It's just tanking. Abby, what economic forces are at play that are making home buyers and sellers hesitant?

[E]

One helpful way to think about it is that there's two kinds of pressure on people's finances right now. The stuff that's actually happening and then the stuff that people think think might happen next. So on the real side, you've Got things like higher gas prices or a labor market that makes it harder to find a job or get a raise. And then on the anticipated side, there's this looming fear of a recession. Right. And even if it hasn't happened, even if it never happens, people are still worried about what it could mean for their income, their savings, their job security. And here's the tricky part. When enough people pull back for those anticipated reasons, it can actually slow the economy down further. And that could be what we're seeing now in the housing market.

[D]

Yeah, you're sort of what if worst case scenario feels like a little too reasonable lately.

[C]

And when we talk about the housing market nationally, it can sound like one big story, but that's not really how it works, right?

[D]

Yeah, exactly. We always hear that maxim of location, location, location. That's not just true about the individual house. So one of the biggest things to understand right now is that there isn't just one housing market. This is really a collection of local markets, and those can feel really different from one another. So right now we're seeing a mix of conditions at the same time. So parts of the Northeast, where I live, Midwest, more where Abby is, for example, inventory is still pretty tight, and homes can move quickly. But in other areas, especially parts of the south and west, more where Elizabeth's at, and Sean, at the moment, the market's shifting more toward buyers. So in a buyer's market, homes are sitting a little longer, there's more inventory, buyers have a little room to negotiate. So when you're looking at these national averages that say things like the market's slowing or the market's uneven, what it actually feels like depends a lot on where you are. It's kind of like when you see headlines about how like, record heat or cold is gripping the nation, and you're like, okay, but it's fine right now where I am.

[C]

Yeah. And that's probably adding to the confusion for buyers and sellers.

[D]

Exactly. So, I mean, you might hear, oh, the market's cooling. But if you're someone who's still facing competition in your city, you're like, what's going on? Or the opposite. And that's really why local conditions matter so much right now, not just the national headlines. If you are considering buying or selling, this would really be an opportune time to reach out to a local real estate agent. Get an on the ground view of your area.

[C]

Now, Abby, a lot of listeners might be wondering if things are feeling shaky, is this a bad time to buy or sell?

[E]

That's a fair question. And when headlines feel uncertain, big decisions feel riskier. And buying a home is one of the biggest financial decisions that there is. So when you're dealing with that real financial pressure and the what if pressure feeling, it totally makes sense to pause. So for you, if your budget is tight or if you're worried about your job, taking a step back and just pausing right now can totally be a smart move. That kind of helps you avoid getting in over your head or having those financial regrets later, but at the same time waiting for everything to feel perfectly certain. That's just not realistic, right? So it all comes down to your situation, right? Are you financially ready? Does the timing make sense for you? Because if you're trying to time the market perfectly, you might never make a move.

[C]

Okay. Any final thoughts for listeners?

[D]

I think the big thing to keep in mind is that slower is not the same thing as stopped homes are still being bought and sold just with like a little more caution. If you're a longtime Smart Money listener, you might remember our former colleague Holden Lewis, who's since retired. He used to always say buying and selling houses is like getting married or having a baby. Like, at any given time, sure, fewer people might be doing it, but it never stops. So for home buyers, a slower market could mean less competition. For sellers, it might mean you need to price more carefully if you want to make sure that your property is going to move quickly. Overall, though, this isn't a market that's canceled. It's just one that's moving at a different pace than people were expecting.

[C]

All right, Abby and Kate, thanks so much for joining us.

[D]

Thanks, Ana.

[A]

I was happy to be here and thank you, Ana.

[B]

Up next, Kate joins us again as we answer listeners question about the forever mortgage debate. But before we get into that listener, a reminder to send us your money questions. Maybe you're trying to figure out whether it's smart for you personally to get into the housing market or you're trying to save for a down payment on a house. Or maybe you just want a new credit card for the summer travel season and aren't sure which one is best for you. Whatever your money question, hit us up on the Nerd hotline. You can leave us a voicemail or Text us at 901-730-6373. That's 901-730-Nerd. You can also email us at podcasterdwallet.com or drop us a comment on Spotify or YouTube in a moment.

[A]

This episode's Money question Stay with us.

[B]

The following is a paid sponsorship, not an endorsement by Nerdwild's editorial team. Today's episode is sponsored by bilt.

[A]

You've heard me talk about BILT as the loyalty program that lets you earn points on rent wherever you live, and they just leveled up even more. As of 2026, renters and homeowners can also earn up to 1.25x points on their housing payments.

[B]

This is thanks to Bilt's three new credit cards, the Palladium Card, Obsidian Card and Blue Card. All three can turn your housing payments, rent or mortgage into flexible rewards so you can choose the card that fits your lifestyle without missing out on points and exclusive benefits.

[A]

Bilt points can be redeemed at top airlines and hotels, Amazon.com purchases, future rent payments and so much more. Bilt points have also been ranked by top publications as the industry's most valuable point currency.

[B]

Your housing payment is most likely your biggest expense. Make it your most rewarding. Find the card that fits your lifestyle and apply today at joinbuilt.com smartmoney that's J-O-I-N-B-I-L-T.com smartmoney make sure to use our URL so they know we sent you. Terms and limitations apply subject to approval and eligibility.

[A]

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It is.

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[B]

Quint.com smartmoney we are back and answering

[A]

your money questions so that we can help you make smarter financial decisions. As per usual, this episode's question comes from a listener by text. I would love for you to frame up the forever mortgage debate. While previous generations prioritize burning of the mortgages as the ultimate sign of financial freedom, I feel like modern economic conditions will allow for me to maintain a low cost mortgage into retirement, and that may actually be the superior wealth tool. Even at a 5.5% interest rate, historical returns in the stock market are better and would be a net positive according to research in the life cycle hypothesis. Additionally, real estate and mortgages allow for a unique opportunity to leverage the bank's money as an investment in my property, that is appreciating. I know this is a psychological shift when compared to previous generations. The last thought I'll make is the inflationary subsidy, which identifies how the value of our debt shrinks over time. Thus, the fixed rate debt is one of the few hedges where the borrower wins as currencies devalued.

[B]

I love the thoughtful, nerdy question we have here. To help us answer it, we're joined on this episode by our Go to Mortgage Nerd Kate Wood. Kate, welcome back to Smart Money.

[D]

Oh, thanks for having me.

[B]

So let's just dive in with some terminology. First, can you explain what a forever mortgage is?

[D]

So the forever mortgage is basically the idea that you've got a home loan and it is not going anywhere. So you're not moving, you're not selling, you're definitely not trying to pay off the loan ahead of schedule. The standard mortgage term in the US is 30 years, but usually the expectation is that you're not going to live in that home for 30 years, let alone pay that mortgage for that long. You're basically getting a lengthy loan term because that helps your monthly payments be lower and more manageable. Forevermortgage is kind of like, but what if I am paying the mortgage for that long.

[B]

Okay, so just to be crystal clear, this is not a loan term that is perpetual or infinite. It is just that you will stick to your 30 year term, not rush to pay it off in any way. And it's also not a 50 year term, which we heard talk about last year. It's just you have generally a 30 year mortgage and you're committing to that.

[D]

Yeah, but a 30 year mortgage is actually really long compared to the rest of the world. Particularly a 30 year fixed rate mortgage, as this listener notes, is relatively disadvantageous to lenders and fairly generous to buyers. This is the way things were set up in the US in the first half of the 20th century, and we stuck with it pretty much anywhere else on Earth, either looking at adjustable rates or you're looking at shorter loan terms where every couple of years it's like, no, we're, we're going to have you renegotiate this so that you're at prevailing interest rates.

[A]

Yeah, 30 years is a long time.

[D]

It's a long time.

[B]

So rare instance where the American banking and financial system is actually better for consumers than maybe elsewhere in the world.

[D]

That's wild.

[B]

I'll take it. Okay, well, let's get to the crux of the forever mortgage debate. It seems like the main argument is whether you should be investing or paying off your mortgage faster.

[D]

So generally you see this framed as should I be putting money toward paying off my mortgage or toward investing? So essentially, could you make more money by investing a set dollar amount each month than you would save on interest if you were to put that same dollar amount toward paying off your mortgage?

[A]

I want us to pause and rewind a little bit. The listener talked about something called the life cycle hypothesis. So we're going to get a bit nerdy here and break that down. What exactly is the life cycle hypothesis? What's that about? Kate?

[D]

So the life cycle hypothesis is the idea that people want to maintain the same level of consumption throughout their lifetime. And so you're doing this by kind of having different financial strategies depending on what stage of life you're in. So in theory, you're taking out your biggest debts, like student loans or a mortgage. During your earlier years, your income is lower, right. Later, you're saving aggressively and you're paying down that debt. And during your peak earning years, the idea is that once you retire, you've kind of wrapped things up. Ideally, you're debt free, you're able to spend the wealth you've built plus potentially leave an inheritance behind.

[A]

That sounds like an ideal Retirement to me. Now tell me how this forever mortgage concept blows up this hypothesis. Kate.

[D]

So the forever mortgage basically blows this hypothesis to hell because part of the idea is that, yeah, you're carrying the debt into retirement and that's not problematic. So our listener is making the argument that potential market returns make it worthwhile because those returns exceed the interest rate that you're paying on the mortgage. If you want to get into the numbers here and see how it actually works, you can use a debt versus investing calculator to lay it all out. NerdWallet has one that you can use for free. And of course, you can find a link to that in today's episode. Description.

[B]

A key concept in this debate is the idea of opportunity costs. And this is when the tentative profit you could have gotten from one option is lost because you chose an alternative. So in other words, if you pay off your mortgage early, you could be missing out on opportunities in the market. And then on the other side, if you keep the mortgage, you could be missing out on opportunities that accompany a paid off mortgage. So, Kate, can we talk a little more about what the opportunity cost of each option would be?

[D]

So it's really hard to get into numbers here because if we are talking investing, and I am not an investment advisor, so I'm speaking as generally as possible here, you're looking at predicting a rate of return that is inherently unpredictable because it's the market. But that said, I did play around with a debt versus investing calculator. And yes, it's meant to compare paying down debt with putting your money in savings. But I put in the historic return on the S&P 500. So 10% as my savings interest rate to kind of get an idea where we'd land. So the listener mentioned a 5.5% mortgage rate. So I entered that my imaginary home loan also still had 25 years to go. $300,000 bounce. I've got, let's say, $1,000 a month that I can either put toward paying down my mortgage or toward investing. So at that 10% rate of return on my hypothetical investment, the amount of interest I would save on the debt by paying off the mortgage was actually almost double what I'd make in interest on my investments. So high 800s versus mid-400s. Not, not the best. But say we're feeling, you know, we're pretty bullish, we're feeling optimistic and we think that we could get a higher rate of return. So if we look at like S and P average over the past 10 years, that's a 15% rate of return. So now the high eight hundreds that I'd save in interest with my mortgage repayment is actually overshadowed by the cool million I would make investing. So it does kind of feel like something where you could find a way to make the numbers tell you the story that you want to hear.

[B]

Yeah. And there's so much uncertainty around this because we don't know what the market is going to do, what home values will be like in the future. And yes, we saw a 15% rate of return over the past 10 years or so. So that's a bit of an aberration. And there's no guarantee we'll see that in the future. So you just don't know.

[A]

So are Reeds telling listeners basically that

[B]

they're gambling, investing comes with risk?

[A]

I'll say that fancy way of putting it, Sean all right. The listener brings up the idea of using a mortgage as a way to leverage the bank's money to invest in your home, which they describe as an appreciating asset. And they also frame it in a way that the asset will always appreciate, which I don't think is true. So I don't completely agree with that, considering that your home isn't always an appreciating asset. Obviously depends on the type of market you're in. But.

[E]

Yeah.

[A]

What are your thoughts on this?

[D]

Kate Yes, I 100% agree with you, Elizabeth. So I want to be really clear that I am not saying the housing market is about to crash. I would not say anything even remotely close to that. But at the same time, it's really important to acknowledge that real estate, just like any other investment, like we just said, is not guaranteed to simply go up forever. Another thing is that the rate at which home values appreciate varies. So we had a couple years post pandemic where home values were increasing absolutely wild amounts like double digits year over year. Now that's slowed considerably. And in a few parts of the country that got really overheated, it's reversed slightly.

[A]

I have a mini side quest, Kate. Some people argue that your primary residence is not an investment because you live there and you're paying expenses out of pocket and it's not as liquid as, let's say, stocks. Now, the exception might be having tenants and then paying expenses and helping you generate income. But conversely, one could argue that if you built up enough equity in your home that could be leveraged and invested.

[D]

This is really like the fundamental question of homeownership in the United States. Like, is this something that is a public Good. And that we want for everybody and is simply important for us to have. Or. Or is this a vehicle for wealth? Because, you know, your home is a source of wealth, but it's kind of a weird one, right? So, like, on one hand, it's worth a lot. This is likely the most valuable thing you own. But on the other hand, like to use that wealth to access that wealth. Like, I don't think solid asset is a thing people say, but this is like a solid asset. Like, it is as illiquid as you can get. Additionally, as long as we're talking about a primary residence, this is your home. So it's not just money. It's not just, you know, the bills you pay. It's probably like a pretty significant emotional investment. And so we don't always think about this in terms of dollars and cents. For some people who are really intent on early mortgage payoff, the goal is really about, this is my home, and I'm going to own my home outright rather than, you know, here's what I'm going to save on interest. I actually have friends who came into a small windfall, and that was what they decided to do. Their home was their only installment debt that they. And they were just like, you know what? It would be cool to say that we own our house. We're debt free, we own our house.

[B]

And that really speaks to how. This is not always a mathematical question. It's really an emotional one, too. It can feel great to not have a debt that you're paying off on a regular basis. On the other hand, if you want to make sure you're set up for success in retirement, it may have been wiser from a number standpoint if your friends had invested that windfall. But that was their personal decision, and that's okay.

[D]

Yeah.

[B]

I'm also thinking about how you really do need some discipline for the forever mortgage strategy to work while you're investing at the same time. So, Kate, I'm wondering what you think might be some common ways that people might mess up this strategy if they maybe aren't so disciplined.

[D]

I mean, really, the main way would be spending that investment fund elsewhere, Right. This money that you've set aside that you're putting toward investing rather than paying down your mortgage, what happens if you use it for a third thing? And sometimes you know what, that might be intentional because you've had an emergency expense come up that has absolutely got to be dealt with. Possibly, though, it could be more just sort of like, oh, I forgot, and this money's right Here in my account. So, you know, maybe you want to go on vacation. Use it. Yeah, you want to go on vacation. You know, there's also the possibility, since we are talking a forever time span here, so pretty long, there's the possibility that like your priorities are going to change.

[A]

Right? Yeah.

[D]

So maybe you were just like child free and like loving this, like single, no kid's life. But then you meet someone and it's just like, oh my goodness, the whole world has changed. And now you've got like a kid on the way. Right. And that bundle of joy is like a big old bundle of expenses. So when you start looking.

[A]

Right. Yes.

[D]

I mean, like, am I wrong? Like, and so when you're looking at like, how are we going to pay, you know, for daycare or something like that, like, yeah, you might start eyeing that money that you had earmarked for investment. Another thing is that like, your income of course can change too. So that could be because you've changed jobs, your household income has changed. You know, maybe you and your partner are all in on this strategy, but then you divorce. And like, even if you're the one who keeps the home, are you still going to have that much money to fund this investing? I'd also say, and I feel like I have to say this because this is a nerd wallet and we always say stuff like this before you're considering putting this quote unquote, extra money toward investing or your mortgage. Are your basic financial bases covered? You know, do you have an adequate emergency fund? Is a big one that comes to mind.

[B]

Yeah. And I also am thinking about how the forever mortgage argument has some blind spots. One is the assumption that you'll have the means to continue paying a mortgage into retirement. And that's not always going to be the case. You know, in a worst case scenario, a few emergency expenses could wipe out your savings and that might make it difficult to cover your housing costs. And also, even if you don't have a mortgage, it's not like your housing costs go away entirely because you'll still have things like property taxes to pay.

[D]

Absolutely. So this is really where you would need to be diligently investing so that you're really feeling confident that you're going to be able to maintain that same standard of living, including, you know, in this case, paying your mortgage all the way into retirement. Again, like, if your circumstances change and you're looking at a significantly lower income, you could end up in a situation where you're either looking to sell the home, like, get that, get the solid asset liquid or, you know, potentially unretiring. Right. Going back into the workforce.

[B]

Yeah. And we haven't even touched on the fact that you need to have a very sophisticated investment strategy to know that you're investing the right amount in the right accounts and you can withdraw that at the right rate with the right amount of risk. And I think this is something where you would want to really hire a professional to do this for you.

[A]

Well, thanks for making that sound so complicated and difficult, Sean. Geez.

[B]

This is where the rubber hits the road. Right? Like, you have to do it the right way.

[A]

Yes, you're right. Thank you. Hopefully people listening will go and hire.

[B]

I'm scaring everyone here, but I should be.

[A]

Yes. No, no, It's a real thing, though. I'm kidding. But. But seriously, it's a real thing. And I love that we have pointed out the intangible or like we said, the. So the emotional and mental parts of this forever mortgage debate. Because as we're going through and talking about this, guys, I honestly would love to pay my mortgage off if I had one. I think peace of mind is something that everyone should have in retirement. And yes, that may look different. Some people may find peace of mind by having more money in the market and a forever mortgage, but please, I want that thing paid off in full.

[B]

Yeah, I get that. I mean, just having debt can feel like such a weight on your shoulders. And having that for the rest of your life just sounds like a drag. And I don't really want that.

[D]

Yeah. And overall, you know, that is our sort of nerd wallet party line on this. Like, this is a personal decision, of course, but we don't generally advocate paying off your home loan or for the sake of paying off your home loan. That said, when retirement's on the horizon, then our advice is starting to shift to like, okay, well, maybe you do want to prioritize paying down that loan.

[B]

Yeah. Additionally, a lot of folks might end up inadvertently in a forever mortgage strategy because of just how late a lot of people are buying houses into their life. It's not like people are getting a house in their 20s anymore, right?

[D]

Yes, definitely. And this is actually how 30 year mortgages came about in the United States. Like, the idea was, if you're finishing schooling, you're going into the workforce, what would be a reasonable amount of time to pay off this loan so that you aren't paying the loan in retirement? And they came up with 30 years, but they're basing that on you entering the workforce and buying a Home when you're like 18, 19, 20.

[A]

Right.

[D]

Crazy.

[A]

Not. Not today's reality.

[D]

Not today. Right. Like this has been cited pretty much everywhere because it was a bonkers statistic. But like, for anyone who has missed this, in 2025, the median age of first time home buyers was 40 according to the national association of Realtors.

[A]

I'm not even there yet.

[D]

Right, so if, yeah, exactly. So if you're taking out a 30 year loan and sticking with it, you are looking at celebrating your 70th birthday and paying off your mortgage.

[B]

What?

[A]

That sounds miserable, Kate. Why would you say that? No, I'm never buying a house.

[D]

I'm just saying like, that would line up. So maybe it's not forever, but it's, it's for a real long time.

[A]

I love that you gave us a little history, you know, lesson there, Kate, in terms of how the 30 year mortgage came about. And it brings me to the listener's question once again. And I think it brings up a broader conversation about how perceptions of mortgages are changing over time. Now, previous generations viewed a paid off home as the ultimate safety net, but some people, like the listener, may argue that a $1 million mortgage is, and $2 million in liquid stocks is actually safer than a retiree with a paid off $1 million home and $500,000 in stocks. Do you think people are seeing burning the mortgage, AKA getting rid of it, as a sign of financial freedom?

[D]

Well, some people definitely do. And we know that there are folks out there who really advocate prioritizing, paying off debt, being debt free. Like, I can't, I can't think of his name, but it's something like Rave dmsi. He's always like, he is always talking about stuff like this. Right? Seriously. I was actually talking to one of the other writers on my team recently because she's been working on an article about this debate. And something that she mentioned is the idea that, you know, like so many other things, like overall in the culture, but also in personal finance, this is really cyclical. So like in the 90s, it was much more like, hey, it's okay to have debt. Like this is a good debt to have. Whereas we go shift into the 2000s, 2010s, especially with the housing crash, views shifted to like, oh God, you know, your mortgage is a trap and you need to get rid of it.

[B]

And how have you seen perceptions of mortgages change in maybe just the past five or 10 years?

[D]

So this kind of ties back to what I was just talking about, but I think something that's probably supporting the idea of the forever mortgage is that we're really not demonizing mortgage lenders and servicers the way that we were like 15 odd years ago. So part of this is that legitimately there are fewer bad actors, mainly because we had so much regulation of mortgage lending that came out of that crisis. So have much more rigorous underwriting standards. Lenders are required to lay out loan terms in, like, a clear and systematic way. And loan products that were pretty literally traps, like balloon mortgages, are just not a thing anymore. And so I think because of all this, people aren't really out there like, oh, you know, I love my mortgage servicer, but at the same time, like, you don't have this active resentment toward paying that bill every month.

[B]

Yeah. There's something about having a mortgage where it actually feels like a luxury if someone has a mortgage.

[D]

Right? No, it's kind of like, yeah, I have a mortgage. Yeah.

[A]

I think it's a bragging. A bragging point right now.

[D]

I think I'm also, like, particularly keyed into this because I do a lot of work on, so, all things lending. So mortgages, personal loans, and particularly student loans. And if you want a loan category where people are absolutely furious with their servicers, the entire system completely resent having to pay that bill. Like that is student loans right now can attest.

[B]

I hate my student loans.

[A]

All right, Kate, now we're going to round this up because we love a good scenario on this show. If you were 45 years old today, with a 5.5% rate, you had an extra 100k, would you put it towards the principal on your mortgage or would you put it into the s and P500? And why.

[D]

Okay, so this is kind of not a scenario because I. I am 45 years old.

[A]

No, you're not.

[D]

No, I. Yeah, I very am. Yeah. So that's something.

[B]

Wow. I thought that you were like, fully 32 years old.

[E]

Yeah.

[A]

No, really, you haven't.

[D]

You don't have to say that. No, seriously, big reveal. I'm 45. And that is very true. So the house that we're living in now, our mortgage rate's actually lower than that. But even if we were at 5.5%, I would pretty much like split the difference. So we do always pay extra toward the mortgage principal. Like not the thousand dollars that I was giving in my example, but like a few hundred because, you know, being able to pay a little extra, you're saving time and interest off your mortgage is nice. Right. It's fun to, like, look at your amortization schedule and be like, oh, like, look what I did. At the same time, though, like, I am not at all interested in aggressively paying off our home loan because, like, one. Overall, that bill is affordable. On the other hand, what am I doing? I am maxing out my 401k and Roth contributions because as someone who, like, really did not start making grownup money until her late 30s, I'm, like, really, really, really playing catch up for someone my age. Also, we kind of mentioned this before, but so being like, oh, I'm free and clear on the house, that would not be a big deal to me. So I live in a state where the largest part of our mortgage payment is the property taxes. And like, Sean mentioned, your property taxes, your homeowner's insurance, that does not go away just because you paid off your mortgage. So for me, it definitely wouldn't be like, oh, my goodness, this burden is lifted. It would be like, oh, man. No one else is going to do an escrow account for me, so, like, I need to find a place to stash this money so I don't spend it.

[B]

Yeah, well, I do like how you're taking a holistic approach to answering this, because you're thinking about your retirement and you're making smart use of the money by spreading it around, because this isn't a situation where you have to put all of your eggs in one basket.

[A]

Guess not.

[D]

I'm trying.

[A]

Sean, you're in the hot seat now. Would you rather have a mortgage forever or pay it off as soon as possible?

[B]

Well, you're going to be shocked to hear that I would do something kind of in the middle. I. I like a reasonable solution where I can get as much of everything that I want all at once. So, like, I don't really want to be paying off a house in retirement, but I also want to use my money for things today like investing for my retirement and going on vacation. So while I'm not doing this currently, Kate, I might take a page out of your book and put a little bit more toward my principal each month just because that can really help you accelerate paying off your mortgage over many, many years, since they are seemingly infinite, as we've been discussing. But, yeah, it's not going to be my top priority because I got this life to live.

[D]

Exactly.

[A]

You got this life to live. Just a mini last side quest before we close. But I. Somebody that I know. Well, someone that I know that knows that person. You guys know what I'm trying to say anyway?

[B]

Sure.

[A]

This lady this lady was very financially savvy. She saved all her money, she did all the investing, she retired last August, and sadly, she passed away last week. So she didn't even really enjoy much of her retirement money and all that she worked so hard to put in place. So just a reminder to your point, Shawn, that you do need to live a little now because you can do all the right things financially and not even get to enjoy it.

[D]

Oh, my God.

[B]

You are justifying my impulse shopping. Thank you, Elizabeth.

[A]

I mean, what am I here for?

[D]

This is like the most sobering anecdote. I'm sorry.

[A]

On a high note. I don't know.

[D]

No, on a high note, I'm like, well, this is why I deserve a little treat today. Yes. Yes, that's right. Don't save them.

[B]

And hopefully people won't be having a mortgage forever. But also, at the same time, do what you want with your money and cover as many bases as you can. And don't feel guilty about it.

[D]

Yeah.

[A]

Live your life.

[B]

Great. Well, Kate Wood, thank you so much for coming on and talking with us about the forever mortgage.

[D]

Oh, thank you for having me and getting me to reveal my age.

[B]

Anytime. We'll have you on soon for more secret reveals.

[E]

That would be great.

[D]

I would love that.

[B]

That's all we have for this episode. Remember that we're here to answer your money questions, so send them our way. You can leave us a voicemail or text us on the Nerd hotline at 901-730-6373. That's 901730, nerd. You can also email [e-mail] or leave us a comment on Spotify or YouTube where you can also subscribe to watch our beautiful faces every single week.

[A]

We would not be here without you, so we want you to come back again and again. But next time, we're going to be talking about combining finances before getting married. A juicy topic. Follow Smart Money on your favorite podcast app that includes Spotify, Apple Podcasts, and iHeartRadio. To automatically download new episodes, here's our brief.

[B]

We are not your financial or investment or mortgage advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

[A]

This episode was produced by our fabulous team, and that includes Tess Figland, Hilary, Georgie, help with editing. Eve Krogman puts together our audio and our video. A big, big, big thank you to NerdWallet's editors for all their help.

[B]

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[A]

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[B]

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[A]

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[B]

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[A]

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