Buyer Considerations – Save Your Cash, Get a Mortgage Instead
Why are Financial Advisor with UBS, Merrill Lynch, Goldman Sachs and other brokerage companies encouraging their clients to refinance their homes? The answer is simple. No one expects interest rates to remain low. And, almost everyone expects inflation to be a factor during the coming years.
Even if you can pay cash for a home, it doesn’t make sense to do so. The math is simple, If you’re lending money at less than 5%, and you can reinvest your cash and get a return of over 5%, you’re using the banks money to make a profit. How’s that for poetic justice? Best of all, you can do this for the next 30 years. This is exactly what the banks are doing with the money they’re borrowing from the Federal Reserve.
The key to being successful with this strategy is to minimize your risk by not buying anything that could be a risky investment. And, with real estate prices at ridiculously low levels in most parts of the country, why not buy more real estate. Think about it.
- If you’re in a historically high growth area, and
- you’re buying property at fire sale prices with the banks money, and
- You have a significant annual return on investment with rental income, and
- You are likely to see significant appreciation over the next 20 years…
Then You Should Be Buying Real Estate!
Some people would argue that you may be foolish not to take advantage of the wonderful opportunity described above. So, don’t be one of the unfortunate people that looks back in several years at the situation and says, “would have, could have, should have”.
Go out, get a mortgage, and buy some Real Estate!