The purchase price of a home is deceptive. When factoring in the total interest paid over a 30-year mortgage, the actual cost can be nearly double the initial price. For a $500,000 home, an additional $400,000 could be spent on interest alone, dramatically altering the long-term financial reality of ownership.

Home ownership is reframed as a high-risk financial instrument, not a safe investment. A mortgage constitutes a 5-to-1 levered, highly concentrated, non-cash-flowing bet on the economic future of a single zip code, making it far riskier than a diversified public market portfolio.

Common wisdom to rapidly pay off a mortgage is suboptimal. Due to compounding, investing extra cash—even if the return rate merely matches your mortgage interest—will generate significantly more wealth over time. One investment compounds up while the other debt amortizes down, creating a large wealth gap.

A proposed 50-year mortgage, intended to improve housing affordability, is a flawed solution. The extended term means borrowers build equity at a negligible rate, making the financial outcome similar to renting and failing to deliver the key wealth-building benefit of homeownership. It's a demand-side fix for a supply-side problem.

The traditional 30-year mortgage for a primary residence is a suboptimal wealth-building tool. A more effective strategy involves securing long-term, non-callable debt to purchase productive, cash-flow generating assets, rather than tying up capital in a personal home.

While a 50-year mortgage could significantly lower monthly payments to aid affordability, it has a major drawback. The total interest paid over the life of the loan would likely be double that of a traditional 30-year mortgage. This prohibitive cost, along with technical challenges, would likely suppress borrower demand for such a product.

A major driver of today's housing scarcity is that homeowners, particularly Boomers, who refinanced into sub-3% mortgages have no financial incentive to ever sell. This seemingly positive economic condition has had the negative side effect of locking vast amounts of housing inventory in place, worsening the supply crisis.

The gap between existing mortgage rates (under 4.25%) and new rates (over 6.25%) is over 200 basis points. This spread, which disincentivizes homeowners from selling, has persisted for three consecutive years. Historically, the gap only exceeded 100 basis points for a total of eight quarters over the past four decades, making the current situation a major anomaly.

For those who can afford a down payment but not the monthly mortgage, Emma Hernan suggests a "buy and rent" strategy. Purchase the property, place a tenant in it to cover the mortgage payments, and build equity. You can then move in years later when your financial situation improves.