"NOYB" wrote in message
.net...

"DSK" wrote in message
...
Suppose you live in a million dollar home, but have zero equity in
that
home (ie--you owe 1 million dollars). In 30 years, that home is worth
$4 million, and you owe still owe $1 million on it (ie--you had an
interest-only loan). You have $3 million in equity on the home. You
decide to take out $2 million of that equity, and put it in an
investment that pays a rate equal to what the monthly payment would be
on the loan (ie--you end up with a net monthly outlay of cash of
zero).
You can then use the $2 million to live on.

The problem here is that you've already made payments on that
interest-only loan that far far exceed your imaginary equity.


NOYB wrote:
Nope. Try again. An interest-only loan on $1 million at 6% interest
gives you a monthly payment of $5000.

And you have a fixed rate for that 30 years, right? It'll never never
never go above 6%, right?

Yes. Wells Fargo is now offering a 30 year fixed rate interest only loan.
The rate that they quoted me was in the mid 6% range.

And you don't have to pay taxes on that "appreciated" property, right?

Can't go up more than 3% every year thanks to Save Our Homes Act.


And your monthly bills aren't any higher in proportion to the size of
that
'million dollar house' right?


No. My house is only worth a million plus dollars because of its
location...not its size.

The bottom line here is that you're living on credit and trying to
convince yourself it's sound fiscal policy.


The only debts that I have right now are my house and my business loan.
Both cars, both boats, and any of my other assets are paid for. Credit
cards get paid in full monthly.

Why is it liebral types cannot understand the "cost" of money. If you can
borrow at a net cost of 3-1/2%, and you can invest at a average return of
6-7%, you should ALWAYS have a max. mortgage.




You probably feel a little guilty because you really know it ain't and
you're risking your family's future. Otherwise you wouldn't even have
posted that feel-good article about how market bubbles never ever
collapse.

I posted it because I like to argue. ;-) I knew you'd bite.