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Zuckerberg gets 1% Mortgage loan

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dmcowen674

No Lifer
7-16-2012

http://finance.yahoo.com/news/zucke...RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

Zuckerberg's Mortgage Gives New Meaning to the 1%


Billionaire Mark Zuckerberg is giving new meaning to the term "the one percent."


The Facebook Inc. (FB) founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property.

Zuckerberg, 28, is the world's 40th wealthiest person, with a net worth of $15.7 billion

"The one percent" is a phrase popularized last year by the Occupy Wall Street movement to protest growing U.S. income inequality.

The top one percent of Americans earns a fifth of the country's income and controls more than a third of its wealt
 
I don't understand why he'd have a mortgage to begin with. When you have 15 billion dollars, why the heck would you need a mortgage to finance a $5 million home?
 
wow at 1% it's worthwhile just not paying it off. Wonder how that works for the bank, doesn't even keep up with nominal inflation. He must have other accounts with them and they want to keep his business.
 
thepd7 said:
Are you upside down? I'm refinancing my 4.75% loan right now that I got 8 months ago.
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I have a 3 year old loan that I got around 4.75% I want to refinance but my place is now worth $50k less than I paid for it 3 years ago so it doesn't look likely.
 
How about we give 1% loans to the 99% and save the 5+% loans for the 1%. I know it would reduce profits but so would other crazy ideas like hiring American workers or providing healthcare for the American workers that are employed.
 
PokerGuy said:
I don't understand why he'd have a mortgage to begin with. When you have 15 billion dollars, why the heck would you need a mortgage to finance a $5 million home?
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I'm fairly sure a huge chunk of his money isn't liquid, it's tied up in stock value.
 
dmcowen674 said:
Meanwhile the fucking bank would not refinance my 6.5% loan.
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That's probably because you're a deadbeat and a credit risk. A loan to someone with billions of dollars in assets is a very, very low risk transaction which means the interest rate is correspondingly low.
 
Pr0d1gy said:
How about we give 1% loans to the 99% and save the 5+% loans for the 1%. I know it would reduce profits but so would other crazy ideas like hiring American workers or providing healthcare for the American workers that are employed.
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Christ...

Our country spent decades over-promoting home ownership, and the result of that was the housing bubble followed by the meltdown.
 
thraashman said:
I'm fairly sure a huge chunk of his money isn't liquid, it's tied up in stock value.
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Yeah, I agree, but even if 99% of his money is tied up, that still leaves more than $150 million in loose change in between couch cushions. 😱 When you have 15 billion, it hardly seems worth it do do that kind of stuff.
 
PokerGuy said:
I don't understand why he'd have a mortgage to begin with. When you have 15 billion dollars, why the heck would you need a mortgage to finance a $5 million home?
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B/c at an interest that low, you're better borrowing and investing the money you would have tied up in purchasing the property. It was probably a financial adviser that performed this transaction and not him.

And with the OP's career history, I'm surprised anyone would loan him money.
 
PokerGuy said:
I don't understand why he'd have a mortgage to begin with. When you have 15 billion dollars, why the heck would you need a mortgage to finance a $5 million home?
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Because if you think you can use that additional money sitting in your bank account to get a higher return on an investment, it makes sense to have a mortgage, especially when rates are so low. How do you not know this.
 
thraashman said:
I have a 3 year old loan that I got around 4.75% I want to refinance but my place is now worth $50k less than I paid for it 3 years ago so it doesn't look likely.
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That sucks. My house is apparently worth $40k more than 8 months ago. Not a bad return on investment.

/brag
 
It's an adjustable rate mortgage, not a fixed one, and that is the starter teaser rate. You don't know how long it is in effect for, what the mark-up from underlying benchmark will be, and what sort of cap on rate increase there is.

IIRC, Carolyn Warren's Mortgage Ripoffs book said the low teaser rate, pick a payment, option arm that got sold to "subprime" borrowers was originally conceived well before that for really wealthy clients so they could gain liquidity to deploy money elsewhere and earn higher return.

In Zuckerberg's case, my totally unresearched guess would be that this mortgage is somehow designed for tax purposes (tax deductions).
 
He is a low credit risk and thus qualifies for a low rate. In this case whatever benchmark they tie the loan to leagves him at that low a rate. My fiancee has an adjustable rate loan that is at 2%. My adjustable rate loan is 2 7/8ths.

I wanted to refinance 3 years ago but the bank refused due to my house being upside down. Dumbasses could had picked up 1.5 or more points by getting me into a fixed mortgage + closing costs. Hard to imagine how we got into this mess with morons running the banks.
 
ichy said:
That's probably because you're a deadbeat and a credit risk. A loan to someone with billions of dollars in assets is a very, very low risk transaction which means the interest rate is correspondingly low.
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Or, as was stated earlier, his home value has gone down so much the bank won't refinance.

ichy said:
Christ...

Our country spent decades over-promoting home ownership, and the result of that was the housing bubble followed by the meltdown.
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And the bubble bursting is why many people can't refinance. Sadly, home prices need to collapse. It's lousy for the people on the wrong end of this, but home prices are simply insane.
 
FerrelGeek said:
Sadly, home prices need to collapse. It's lousy for the people on the wrong end of this, but home prices are simply insane.
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And this is why so many of us contacted our elected officials and asked them to vote down the bailout while knowing that it could send us into another Depression.
 
Let's be absolutely clear about one thing. NOBODY has a right or entitlement to a mortgage at any interest rate. The only reason that Zuckerberg got one at a 1% interest rate is because for the bank it's for all practical purposes a risk-free loan.
 
Pr0d1gy said:
And this is why so many of us contacted our elected officials and asked them to vote down the bailout while knowing that it could send us into another Depression.
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ichy said:
Let's be absolutely clear about one thing. NOBODY has a right or entitlement to a mortgage at any interest rate. The only reason that Zuckerberg got one at a 1% interest rate is because for the bank it's for all practical purposes a risk-free loan.
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Correct on both accounts.
 
Capt Caveman said:
B/c at an interest that low, you're better borrowing and investing the money you would have tied up in purchasing the property. It was probably a financial adviser that performed this transaction and not him.
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I see your point, but that gain hardly seems worth it compared to his wealth. It's like a multimillionaire picking up pennies. The transaction itself (the mortgage, or picking up pennies) makes good sense, but in the grand scheme hardly seems worth it. You're probably right though, it's done by some financial adviser looking out for the best interests of his client.

And with the OP's career history, I'm surprised anyone would loan him money.
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If someone sees his posting history, they'd be insane to loan him $1.25, much less refinance a mortgage.
 
PokerGuy said:
I don't understand why he'd have a mortgage to begin with. When you have 15 billion dollars, why the heck would you need a mortgage to finance a $5 million home?
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This. Just buy the fucker outright with cash. And i mean actual cash. Walk in with a big ass suitcase all because you can 🙂
 
It is a little strange that he took out a mortgage. Most of his net worth is in stock but I am sure he has more than enough $$$ lying around.
 
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