I’ve been a lot more active on social media over the past few years.
And one of my observations is that everyone is looking to go viral with some controversial take that ruffles feathers.
You’re essentially rewarded for sparking a healthy (or perhaps unhealthy) conversation, so that’s often the goal.
One recent tweet I came across said, “If you have a mortgage, you’re not rich.”
Clearly this is challenging people to argue. But is it actually true? Or do tons of rich people have mortgages themselves?
Rich People Love Mortgages
Without getting too into the weeds on this one, since for me it’s a pretty silly take, I’d argue that more rich people than “not rich people” have mortgages.
In other words, you’re more likely to have a mortgage if you’re wealthy.
Allow me to explain. For starters, wealthy folks are more likely to be homeowners than renters.
And if you’re a homeowner, chances are you have a mortgage since buying a home all-cash just isn’t a reality for most.
Even if it is possible, the ultra-wealthy still don’t want to sink a big chunk of cash into an illiquid asset like a single-family home.
Why? Because chances are they can earn more on their money elsewhere. Real estate likely isn’t the best investment they can make, but it’s certainly a good one. And they get to live in it too!
The rich know that putting your money to work for you is better than actually working.
Just ask Warren Buffett, who famously said in 2013 that “today is the day to get a mortgage.”
What he meant by that was mortgage debt is a good debt, and with rates at all-time lows during that period, it was an incredible time to obtain one.
Good, Cheap Debt You Can Keep for Decades
He added that it was worth keeping for a long time too, aka 30 years in the case of a 30-year fixed.
So those saying to only buy a home if you can afford a 15-year fixed, like Dave Ramsey, might be playing small ball.
While people eschew debt and say to pay off the loan as quickly as possible, Buffett was saying the opposite.
Last time I checked, he’s pretty rich. Perhaps not the richest person in the world anymore, but top-10 in the world easily. He’s not hurting.
For the record, he also took out a 30-year fixed mortgage back in the 1970s on a property in Laguna Beach, and as of 2017 still had it.
At the time, he joked that it was the only home loan he’d had “for fifty years,” a nod to him probably refinancing the loan at some point.
But the takeaway is clear; he took out mortgages even when he didn’t have to, and he didn’t pay them off ahead of schedule even if he could.
Buffett isn’t alone either. Look at Mark Zuckerberg’s mortgage (#3 on the Billionaires List) or Beyoncé and Jay-Z’s $50M+ mortgage.
Long story short, the rich love mortgages because they are cheap forms of debt with excellent terms (relative to other loans) that are easy to obtain!
[Renting vs. buying a home: 55 pros and cons to consider]
If You Don’t Have a Mortgage, Maybe You’re a Renter
Now let’s consider the other side of the story. The individual without a mortgage.
Yes, it can be a homeowner who paid off their mortgage, which is a wonderful accomplishment and nothing to sneeze at.
Especially if they’re close to or in retirement, and don’t want another liability hanging over their head.
But a mortgage-free individual is probably more likely to be a renter, someone with no ownership in the property they are living in.
So to the original statement that if you have a mortgage, you’re not rich, I call BS.
Especially since we know homeowners have much more wealth than renters.
Per the Federal Reserve, the median wealth gap between homeowners and renters was nearly $390,000 as of 2022, and the average wealth gap was over $1,370,000.
This is partially because wealthy people have the means to purchase real estate. But it’s also because real estate generates tremendous wealth.
In other words, taking out a mortgage is a great way to get rich.
Just be sure you can afford the monthly payment for the foreseeable future and have the wherewithal to keep the property for the long-haul.
If you do, you’ll likely be handsomely rewarded, even if you have a mortgage. Oh, and that mortgage means you can free up cash for other investments, which lends itself to better diversification.
Read on: Do I own my home if I have a mortgage?
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.