31–40 of 193 posts
Earlier quoted context omitted.
But is the cost of a house significant to someone worth billions? I'm asking why he wouldn't just pay cash for it.
There's a saying along the lines of "You don't get rich by spending money" that applies here. A mortgage at 1.05% interest as mentioned in the article is basically throwing money at the person taking the mortgage.
One reason: Almost half of their compensation packages are in Apple shares. So their lender, Opes Advisors, assigned the couple a financial adviser who used a software program to factor in debts and future income, including the stock, and the costs of education over the years for two young children. They don't go into much detail, but this part scares me. I'm assuming the "model" estimates some sort of future value f…
Why does someone like Zuck need a mortgage? Is it economically advantageous to him in a significant way?
Mortgage interest is tax deductible, which can be quite substantial if you're trying to lower your tax burden. The good news is that AMT comes along and typically eats up deducting property taxes and other things, but the mortgage interest itself still works.
Earlier quoted context omitted.
Just bought my first house a couple months ago. Despite picking a lender that seemed to have their ducks in a row, I wound up 'at the table' from 9AM to 6:45PM. Everybody involved was surprised it actually got done. Fundamentally broken is an understatement.
We bought a house last year with a credit union, and everyone during closing was quite surprised that we actually closed within two hours of starting. Apparently it is not unheard of for mortgage lenders to be doing final approval up to the day of closing, and keeping people on hold/not answering phones while you and the seller are sitting there twiddling your thumbs.
We looked at financing through some of those new 'hip' lenders. My wife works for Google and SoFi had some of the highest rates (even with 'Google discount' and 10/20% down). They may get your pre-approval within a day, but in reality most lenders get that done quickly. In the end, they have to play the game everyone else is playing and it means long turnaround times to actually close. This is the part that is fundam…
I have little interest in tying myself down by buying a house, but the part that's most appealing to me is the mortgage structure. You get to borrow money at a ~3.5% interest rate, in order to invest in something that produces 5-7% yearly returns. On average, this is going to make a ton of money in the long term. Is there any way to do something similar with stocks, without paying an insane amount of money in interes…
One reason: Almost half of their compensation packages are in Apple shares. So their lender, Opes Advisors, assigned the couple a financial adviser who used a software program to factor in debts and future income, including the stock, and the costs of education over the years for two young children. They don't go into much detail, but this part scares me. I'm assuming the "model" estimates some sort of future value f…
Stock is not cash. It is less liquid and more volatile. But if one properly discounts to accommodate those factors, it's just another deferred cash flow. This time, not relinquishable by the company. (If the stock goes to zero the employment cash flows do, too.)
One reason: Almost half of their compensation packages are in Apple shares. So their lender, Opes Advisors, assigned the couple a financial adviser who used a software program to factor in debts and future income, including the stock, and the costs of education over the years for two young children. They don't go into much detail, but this part scares me. I'm assuming the "model" estimates some sort of future value f…
A nit: You mean non-recourse state , as in "The lender has no recourse to tap your assets in order to fulfill obligations of the mortgage in the event of non-payment." But CA is a bit strange: A mortgage is non-recourse only in defined circumstances, eg when the mortgage is purchase money guaranteed by the property. It used to be that refis turn non-recourse debt into recourse debt. I'd be very surprised if a loan ba…
edit: actually its complicated
Earlier quoted context omitted.
But is the cost of a house significant to someone worth billions? I'm asking why he wouldn't just pay cash for it.
There's a saying along the lines of "You don't get rich by spending money" that applies here. A mortgage at 1.05% interest as mentioned in the article is basically throwing money at the person taking the mortgage.
Why does someone like Zuck need a mortgage? Is it economically advantageous to him in a significant way?
He avoids paying taxes on the sale of stocks to finance the home.
Mortgage interest is tax deductible.
His stocks will almost certainly yield more than the interest rate on the mortgage.
He's getting a sweetheart deal from the bank.
For him, selling stock is a PITA because he has special class of stock that grant him voting rights far beyond what a normal share is worth. These special shares are granted to him by the board of directors. So selling 1 share means losing like 1000 votes (they convert back to 1:1 upon sale), meaning he needs to be careful when liquidating assets. By waiting five years, he can use vested options to pay the mortgage, rather than selling his special class stock.