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Forum » If I take out a mortgage for more than I have in savings...
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Thread: If I take out a mortgage for more than I have in savings...

post 1640525143 06-09-2021, 01:30 PM
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If I take out a mortgage for more than I have in savings...

do I have a negative net worth if I have no other assets?
Boycott foodservice industry crew
post 1640525513 06-09-2021, 01:36 PM
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Depends, do you have other assets like a 401k, Stocks, Roth, HSA, Traditional IRA, other properties?
post 1640526253 06-09-2021, 01:46 PM
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lol used to think you were smart. If you are using the money from the mortgage to acquire an asset, then you will break even assuming the FMV of the asset is worth the amount loaned.
mo e
post 1640537503 06-09-2021, 04:20 PM
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Scenario:

Savings account is: $100k
House cost: $300k
Down Payment On Mortgage: $60k
Mortgage Loan: $240k + $x in fees/stuff

Immediately when you pursue that transaction, your Savings account becomes $40k. You owe $240k + $x. But now you're also tied to a house worth $300k. So your net worth doesn't change at all actually, except due to the fees along the way. And your net worth will over time increase swiftly because your mortgage payments are giving you equity (as opposed to disappearing via rent), in addition to the likely scenario that your house goes up in value over time as well.
post 1640538613 06-09-2021, 04:34 PM
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ITT: we assume asset prices can never go down

Don’t get me wrong money is devaluing all the time too

At best in the long run it’s a wash

FWIW I think property is a better store of wealth but I’m heavily biased
post 1640539083 06-09-2021, 04:40 PM
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Originally Posted By Anachron⏩
For OP's statement to be true...

Asset value would need to be reduced to be less than the difference between his mortgage and his savings.

It also states he has no other assets other than his savings - so what is the mortgage secured by?
I would assume by his question that the "no other assets" means that he wouldn't have any other assets aside from the house secured with a mortgage

to answer your question OP, no. not unless you pick an absolutely terrible home and vastly overpaid for it.
"So t
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