Reply to If paying off your mortgage is dumb, why do so many rich people do it?

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Reply to "If paying off your mortgage is dumb, why do so many rich people do it?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]We have three houses - our primary residence, our second home, and an investment property.  We have mortgages on two of them, our primary residence and the investment property.  The combined value of the homes is about $3.3 million.  The combined mortgage debt is about $1.1 million.  The interest rates are 1.7 and 1.85 percent.  Monthly interest payments are less than $2000 a month for both mortgages combined.

How on earth would it make any sense to pay these mortgages off?  It would make zero sense.  Also, if I were to do that, we’d have $3.3 million in real estate investments and that would tilt a diversified portfolio into imbalance.

Finally, it’s not true that you can’t get a mortgage except at higher rates if you first buy in cash. We got the mortgage on the investment property (a duplex in a highly desirable DMV neighborhood) after buying it in cash.  Not only that, we did it while retired and without a consistent monthly income.  We worked with Schwab, where we have all of our retirement and brokerage accounts. They are tied in with Rocket Mortgage.  They arranged for “asset depletion” loans based on the balance of our retirement/brokerage accounts AND we qualified for discounted interest rates because of the size of our accounts.

Lots of misinformation on this thread about what one can and cannot do.  [/quote]
It would still need to be a Jumbo loan unless you are below that amount owed on the home (or multiple loans below the jumbo amount so a nightmare of paperwork and multiple mortgages on each house). 
We own 3 homes and all of them were paid for with cash---paid over $8M total, likely worth $10M+ currently.  We prefer the guarantee of knowing taxes and upkeep is all we owe for each home.  Sure I could put $5-6M of that into the stock market or into CDs at 4-5% but I already have plenty in both of those.  No need to risk more in the stock market, can live quite luxuriously off of the 4-5% return on what we have if needed. [/quote]

Neither is a jumbo loan and paperwork was a breeze.  There was really nothing to it.  As I said, it was an “asset depletion” loan obtained through Schwab / Quicken Loans.  I didn’t need to document my assets because Schwab already knew them because all of my accounts are with them.  In a nutshell, they basically said “we know what you have and we will arrange the loans for you.”

You do you, obviously, but you ain’t being smart. [/quote]

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