How the wealthy make money with their mortgages
thought mortgages were just for people of modest means, think again. From the
upper class to the uber affluent, the wealthy across American make big use of
home loans. Even
billionaires see a benefit to financing their homes.
people with these kinds of resources want mortgages? It’s an important
question, and the answer shows how a home loan can be an asset to almost
anyone. Regardless of your wealth or income, here are the ways a mortgage may
into a home sooner
Even if you
earn enough to save up to buy a home in cash, doing so may take years. A
mortgage is often the quickest way to get into a new home and start enjoying
typically have some of the lowest interest rates of any type of lending
product. Therefore, borrowing on your home may be a cheap way to keep more of
your money or avoid more expensive borrowing elsewhere.
you’re wealthy enough to purchase a home outright, getting at that money can
come at a price. Dipping into investments, accessing retirement funds or
selling off property can result in fees, taxes or losses. Borrowing on your
home can be an efficient way to avoid those expenses.
If your mortgage has a 4% interest rate (4.139% APR) and your investment accounts are returning 7%, where’s the best place to put your money? Investing comes with risks, but for many people, it makes the most sense to put their extra money where the expected payoff is highest.
expenses are a fact of life, and quickly accessible cash funds are often the
most reliable safety net. Having a mortgage can enable you to set aside the
cash you need to protect your financial security.
reasons, purchasing a home using a mortgage, making the standard payments and
refinancing the loan when advantageous can be a wise financial strategy. It may
even be beneficial to increase your mortgage balance at times by taking cash
out to consolidate debt or put toward a home renovation, college tuition or
This doesn’t mean simply buying a home or getting a mortgage will guarantee you wealth. It does mean, however, that if you want to imitate the successful habits of the affluent, you can start by looking for opportunities in your home financing. Contact us for a free mortgage consultation for your specific situation.
Draper and Kramer Mortgage Corp. does not provide financial planning, investment, tax, accounting or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, financial planning, investment, tax, accounting or legal advice. You should consult your own financial planning, investment, tax, accounting or legal advisers before engaging in any transaction.