Anonymous wrote:

Anonymous wrote:You can only write off up to 750k on mortgage deduction so pretty meaningless to a rich person.

Also diversification. The CEO and Founder of Kraken (huge Bitcoin exchange) sold a ton of Bitcoin and bought a mansion in California for cash or Bitcoin.

I know on Wall Street many traders buy Hampton houses cash.

All fear with a highly risky and highly speculative job taking a long term expensive mortgage is too risky.

Totally wrong. They all take mortgages because they understand math and finance.
These CEOs and Wall Street traders know that making financial decisions based on emotions is a recipe for disaster.

Anonymous wrote:Mainly because they’re more liquid and have more cash flow than the typical middle class SOB who goes into austerity mode in the near term to tie up their cash in an illiquid asset.

Anonymous wrote:You can only write off up to 750k on mortgage deduction so pretty meaningless to a rich person.

Also diversification. The CEO and Founder of Kraken (huge Bitcoin exchange) sold a ton of Bitcoin and bought a mansion in California for cash or Bitcoin.

I know on Wall Street many traders buy Hampton houses cash.

All fear with a highly risky and highly speculative job taking a long term expensive mortgage is too risky.

Anonymous wrote:I never think rich people are “dumb” - UNLESS they inherited
the $$.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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.

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.

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.

Anonymous wrote:You always see it on the real estate forum: “Oh, that’s a $4 million house so interest rates don’t matter. At that price point, people are just paying cash.” Don’t those rich, smart people know that they can just take out a mortgage for 6% and invest the difference in the stock market at 10%? And then when interest rates drop, they can refinance to a lower mortgage rate.

I finally have enough saved up to pay off my mortgage, and it’s the greatest feeling in the world. I am actually violating my own rule a little bit – right now, I have the money in I Bonds and short-term Treasuries, but only because they’re risk free and paying a higher rate than my 4% mortgage. But the minute the interest rate drops below my mortgage rate, I’m cashing out and paying off my mortgage. It’s such a huge stress relief to have arrived at this point.

My only meaningful expenses going forward are going to be food, utilities, and property taxes, along with the occasional home repair. It feels incredible because I now require very little income to survive. And I assume super rich people also feel that way since many of them don’t use mortgages. To me, part of being rich (even though I’m not “rich” yet) is not having to make every decision purely based on maximizing money.

For example, you could say that some rich people are dumb because they take significant amounts of leisure time – don’t they know they could be working and earning more money? But at a certain point, it’s not all about the money - it’s about your lifestyle and how you feel getting from Point A to Point B. Thoughts?

Anonymous wrote:You can only write off up to 750k on mortgage deduction so pretty meaningless to a rich person.

Also diversification. The CEO and Founder of Kraken (huge Bitcoin exchange) sold a ton of Bitcoin and bought a mansion in California for cash or Bitcoin.

I know on Wall Street many traders buy Hampton houses cash.

All fear with a highly risky and highly speculative job taking a long term expensive mortgage is too risky.