Despite being considered the richest man in the world today, Elon Musk pays for his houses with home loans.
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Any of us would think that celebrities and entrepreneurs, with all the millions of dollars they have in their accounts, would choose to buy properties in one payment. But the reality is different. Despite having enough capital, many pay a 30-year mortgage like millions of people, because there is a way to earn more money than they spend on their loan.
While for the vast majority of Americans a home loan is the only way they can hope to buy a home, for millionaires it is a choice that can earn them more money. Although your strategy requires that you have enough capital to pay for a mortgage, your monthly expenses and have savings, is something you could do to increase your earnings.
Even before the coronavirus pandemic, mortgage rates were at their historic lows, a situation that with the disease and after the Federal Reserve put the benchmark interest rate at 0% caused them to decrease even more. This was shown as a great opportunity for investors, because they can buy a property at low interest, but also put their money to invest, obtaining similar or higher returns.
Celebrities with mortgages
The couple made up of Beyoncé y Jay ZMusic artists recognized as one of the richest couples on the planet have bought luxury homes by borrowing tens of millions of dollars. For example, according to The Wall Street Journal, public records show that this marriage financed his $ 88 million mansion in Bel-Air with a $ 52.8 million mortgage from Goldman Sachs.
But they are far from the only ones to do so, even royalty is on the list. The $ 14.6 million home in Santa Barbara, California, acquired by Prince Harry and Meghan Markle was financed with a $ 9 million mortgage, according Variety.
Elon Musk, recently recognized as the richest person in the world, despite having an estimated net worth of $ 182 billion, last year he obtained $ 61 million in mortgages to buy five houses in California.
What’s the trick?
It is clear that for these and other celebrities there is no financial concern, but your strategy can also be carried by other people that they can pay their monthly bills, their mortgage and still have an amount to invest.
If you had enough money to pay for a house, buying the property through a mortgage may be a better option, we explain why. When you borrow, you can use your remaining capital for other thingsOne of them and the one that should be your priority is investing.
Now that mortgage rates are at historic lows, reaching up to 3.4%, it becomes an excellent opportunity to put a similar amount in an investment with a 4% rate of return. That is, with sufficient capital, you can pay a mortgage and put your money in an investment, which will end up giving you more profits as you build your heritage.
As pointed out Yahoo! Finance, the same thinking works fine for normal peopleAlthough you will probably invest with hundreds or perhaps thousands, instead of millions. Low rates can help current homeowners too – refinancing now could cut your monthly payments substantially and invest the difference.
If after so many years of savings you have enough capital to buy a house, but at the same time you can invest, we are sure that your home will end up costing you less with the gains you can obtain over the years.
You may also like:
• How and when to refinance your mortgage credit
• How you can be richer buying a house with a mortgage than with cash
• Save up to $ 50,000 if you refinance your mortgage in times of COVID-19
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