Re:Owning nothing is now a luxury, thanks to a number of sub...
by kd5bjo on Thursday June 13, 2019 @06:38AM
(#20173413)
> That assumes that you can sell the house for more than what you bought it at.
Not necessarily; as long as the value of the house[1] doesn’t fall more than the principal you’ve paid, you’ll get more cash from the sale than you put up as a down payment. The trouble with buying on margin, though, is that it amplifies losses— the worst single day in the stock market[2] was about a 20% drop, but you get the same effect from a 1% drop in your house value if you hold the 95% mortgage that you described.
[1] Folding transaction fees into the effective value
[2] https://en.m.wikipedia.org/wiki/Black_Monday_(1987)
Not necessarily; as long as the value of the house[1] doesn’t fall more than the principal you’ve paid, you’ll get more cash from the sale than you put up as a down payment. The trouble with buying on margin, though, is that it amplifies losses— the worst single day in the stock market[2] was about a 20% drop, but you get the same effect from a 1% drop in your house value if you hold the 95% mortgage that you described.