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You're forgetting about how leveraged housing is though. If you bought a 500k house five years ago with 100k down, and now it's worth 1m -- you've effectively
by nostromo 5y ago
You're forgetting about how leveraged housing is though.
If you bought a 500k house five years ago with 100k down, and now it's worth 1m -- you've effectively gained a 500% return on your 100k, maintained your principle, and you could live in your investment to boot. A house with 20% down (or less) in many housing markets would have blown the S&P out of the water in the past several years.
Yes, you can leverage in the stock market too -- but rarely at a 4:1 ratio -- and if you did leverage up too much, you would have been wiped out by a margin call in 2020.
- jdmichal 5y agoLeverage, and refinancing. It's not like taking a mortgage locks you at that market rate. With refinancing, you can take advantage of market rates to improve your leverage even more. I refinanced last year to a 15-year mortgage at a sub-2% rate. The math happened to work out that my payments didn't change, but it halved the amount of my payment going to interest each month. Which, in turn, accelerates my payoff date by about 10 years.
- berdario 5y ago> maintained your principle You probably meant "principal": Define principal Noun 2. a sum of money lent or invested, on which interest is paid. "the winners are paid from the interest without even touching the principal"