Tuesday, August 25, 2015

What should you do if your home equity is much more than your mortgage?


Let's say you buy a $2MM home with only 10 percent down, and therefore get a $1.9MM loan at 5 percent. The home appreciates by 8 percent (is this realistic?) in five years. What should you do now to maximize your profit?
Added (1). I think they call this "leverage". Can someone explain how this works, and what are benefits of it?
Added (2). @Anonymous, Well, actually you'd be surprised how many of the wealthy give small down payments for big mortgages. Paying cash for a home in this low rate environment proves you're a terrible investor.
Added (3). Made a typo. I meant $1.8MM, not 1.9

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