Zuckerberg gets 1% Mortgage loan

[ShawnD1]

Remember, banks love to lend you money if you don't really need it. No risk, and they are still getting 1% on the money.

They also like to lend small amounts of money to people who can't pay it.

$5 loan
miss payment
$40 late fee + 209% daily interested, compounded every second

 

[Infohawk]

Is he doing this for the tax exemption? I can't imagine he hasn't cashed out some of his assets. It would be extremely risky not to.

 

[spacejamz]

Lending money to people who are in dire financial straits is a great way for a bank to go belly up. They are businesses, not charities.

Lending to risky borrowers increases the possibility of fees that they can charge (overage fees, late fees, etc)...A large chunk of a lender's revenues come from the fees they collect.

 

[cubby1223]

Meanwhile the fucking bank would not refinance my 6.5% loan.

Guess what! The risk of Zuckerberg not repaying the loan is pretty much 0%. You on the other hand...

In other words, get over it.

 

[GrumpyMan]

I would of thought that he had that much in his couch cushions. Mortgage?

 

[momeNt]

I would of thought that he had that much in his couch cushions. Mortgage?

The ultra rich are also ultra frugal. Even if that amount is very small compared to his vast wealth, he doesn't see the point of wasting it where that amount of money could be working better for him elsewhere.

 

[spidey07]

The ultra rich are also ultra frugal. Even if that amount is very small compared to his vast wealth, he doesn't see the point of wasting it where that amount of money could be working better for him elsewhere.

Very true, you don't rich by spending money. You get rich by making your money make more for you. Rich folks can be the biggest penny pinchers you've met.

 

[Doppel]

I've checked out ARM rates, there's no way that a "normal" person could get even an introductory 1% rate from a reputable lender. As I said though, return is proportional to risk and a mortgage for Mark Zuckerberg is for all practical purposes devoid of risk.

Yeah really. ARMs right now are not much lower than fixed. Not a person in this thread could get a 1% loan, ARM or other.

 

[spidey07]

Yeah really. ARMs right now are not much lower than fixed. Not a person in this thread could get a 1% loan, ARM or other.

If you had other accounts with said bank of substance, I'm sure they could. But I'm pretty sure I've seen arms as low as 1.75 or 2%

If I'm a bank, I sure as hell would want all the business I can get from him and would offer all kinds of incentives. In the end, the bank WILL make their money.

 

[hotvette79]

well still us hard workers that pay our bills and have a nice credit ranking are still paying 3% and also make good money! load of crap!!!

 

[bfdd]

1%? LOL yea two kneecaps if you don't pay on time?

He trusts me, isn't that what "credit" is based on?

 

[Hayabusa Rider]

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?

You get money by making smart choices. At that rate of interest he can make more by investing 5 mil and taking the mortgage.

 

[davmat787]

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?

At 1%, that is basically free money. Hell, he could earn more putting that into a freaking CD probably, and has the staff the manage all the money. Say he puts that 5 million into an investment that earns 3% annually instead of simply buying the house outright, and he comes out ahead.

 

[phillyTIM]

Whoa.... talk about being part of the 1% ... Zuckerberg LITERALLY is with that mortgage rate!!!!

 

[WelshBloke]

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.

Yeah what could possibly go wrong with giving out lots of easy, cheap loans to people that might not be able to repay them. :hmm:



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[Howard]

The ultra rich are also ultra frugal.

How do you figure?

 

[Hayabusa Rider]

How do you figure?

Perhaps in the sense of prudent finance?

 

[spidey07]

How do you figure?

Again, you don't get rich by spending money unless that money will make more money for you.

 

[mshan]

I don't think you can compare Zuckerburg's refi with the 3/1, 5/1, or 7/1, etc. ARMs that are readily available for all of us regular folks.

You may be focusing on the original low teaser rate before the ARM becomes fully adjustable later down the road. Zuckerberg's ARM is freely floating right off the bat (sounds like 1 month LIBOR + 0.8%).

Zuckerberg can probably directly go to a wholesale lender, who may be looking for 1% profit over their underlying cost of capital.

Plus, we don't know if Zuckerberg paid points to buy down his rate, and we don't know what appraisal of underlying collateral (home) is and what his equity in home is based upon requested refi amount.

Doesn't sound like he is getting some sweetheart deal that lender is losing money on. They are probably making more money than short term Treasuries or commercial paper money market type funds that might be lending to European institutions, and presumably risk of Zuckerberg defaulting is next to nil.

 

[Brigandier]

Er, I hope someone realizes the difference between taking a loan on a fraction of your wealth than taking a loan on multiples of your future wealth.

 

[blackangst1]

I don't think you can compare Zuckerburg's refi with the 3/1, 5/1, or 7/1, etc. ARMs that are readily available for all of us regular folks.

You may be focusing on the original low teaser rate before the ARM becomes fully adjustable later down the road. Zuckerberg's ARM is freely floating right off the bat (sounds like 1 month LIBOR + 0.8%).

Zuckerberg can probably directly go to a wholesale lender, who may be looking for 1% profit over their underlying cost of capital.

Plus, we don't know if Zuckerberg paid points to buy down his rate, and we don't know what appraisal of underlying collateral (home) is and what his equity in home is based upon requested refi amount.

Doesn't sound like he is getting some sweetheart deal that lender is losing money on. They are probably making more money than short term Treasuries or commercial paper money market type funds that might be lending to European institutions, and presumably risk of Zuckerberg defaulting is next to nil.

This. This is certainly NOTHING compared to the former Countrywide's sweetheart deals.

 

[zephyrprime]

Are you upside down? I'm refinancing my 4.75% loan right now that I got 8 months ago.

How's it even worth it to refinance for only a 1% decrease in rates given closing costs?

 

[thepd7]

How's it even worth it to refinance for only a 1% decrease in rates given closing costs?

1) That's zero closing costs
2) It's a 1.25% decrease on a 30 yr, however I'm likely going to go with 7/1 ARM, which is 2.75%, saving me $400/month.

 

[Suspicious-Teach8788]

Meanwhile the fucking bank would not refinance my 6.5% loan.

Sorry, you just pretty much spelled out what kind of person you are with that post.

 

[werepossum]

Yeah what could possibly go wrong with giving out lots of easy, cheap loans to people that might not be able to repay them. :hmm:



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LOL +1 If only history furnished some sort of examples to help answer that question . . .

Er, I hope someone realizes the difference between taking a loan on a fraction of your wealth than taking a loan on multiples of your future wealth.

This. Bank's are looking for really safe investments since they have to generate profits to pay interest and meet costs, and this is almost the definition of a safe investment. Does make me wonder though about the advisability of a law limiting the bottom interest rate - is this sort of safe haven really useful to society? Considering that we taxpayers are subsidizing the banks via our GSEs' loan guarantees, perhaps we wouldn't be out of line to force a more level playing field. While I have no lust for Zuckerberg's fortune, neither am I wild about in effect subsidizing subsidizing its expansion. (Although it's worth pointing out that since the amount is above government guarantees, I have no money in his bank, and indeed I have no mortgage, I'm not in any way subsidizing his mortgage no matter how small the rate.)

Sorry, you just pretty much spelled out what kind of person you are with that post.

One's credit rating is only a small part of what kind of person one is. Dave's a nice guy, I've met him. Beyond that, there are numerous reasons why a particular bank would not want to refinance your average bear while offering such sweetheart deals to people who don't actually need a mortgage, such as the bank's current mortgage exposure, its current repo holdings, his credit rating, and the perceived direction of home values in his part of town, off the top of my head.

The bank's behavior is pretty much human behavior though. When a man's looking for a woman, bet your bottom dollar he's gunning for those women who need no help in finding a lover and running from those who need a little help to find a man. 😉