Thirty-plus years ago I had the pleasure of breaking bread with a very smart and very rich man. In fact, back then he was just a millionaire, today he is a billionaire, so I know he is smart. During our conversation, he was telling me how he looked at real estate and insurance. And those words have stuck with me for all of the following years.
His first word of advice was to buy term insurance when you are young. His rational was that you get more insurance coverage for the dollar spent, and when you and your family is young that is the point in time where if a tragedy occurred the family would receive substantial benefits from the higher coverage. Then as you get older, the cost of coverage increases, but as you get older you should need less coverage.
The other words of wisdom he taught me was to buy the most expensive home that you can afford at the time of the purchase. His rationale was that in a few years after the home was purchased, your personal financial situation should be improved. Hopefully, in the years after the purchase your income will be higher, thus reducing the mortgage payment burden. Plus, the federal tax benefits that you receive with the deduction of the interest paid on the mortgage will help you too.
As he put it, the purchase of a home is another way to save for retirement. He was quick to state that the times are changing and a large majority of first-time home owners do not keep the home until they retire. So in the time the home is owned it will hopefully increase in value. When you do retire, you can sell the home for a substantial profit and your home can be replaced with a smaller, more cost-effective home.
Even though the advice was given to me over 30 years ago, I am a firm believer in those words of wisdom today. Plus, here in the High Country we have the opportunity to take advantage of the high demand for real estate in such a great place. The potential of appreciation in value on most all real estate is high here, so take advantage of that fact.
Primary homes, second homes and even investment property here in the High Country can be a great place to invest. Appreciation in value, tax benefits plus the opportunity to live or vacation here is another wonderful benefit.
So buy the most expensive real estate you can afford today, and in a few years you too will benefit form the words of wisdom from one of the richest men in the world.
For answers to your mortgage related questions call Bob Kieber at (970) 453-4700 or email him at email@example.com. Bob is a local mortgage lender with Centennial Bank. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country. Member FDIC, Equal Housing Lender. NMLS Bank #401640 Broker #289610. For tax benefit information please consult with a professional tax advisor. The opinions expressed are those of the individual, and do not necessarily reflect those of Centennial Bank.