Here's a problem that came up in last week's class. What would you do?
You bought a house in 2019 for $500,000.
The house is now worth $1,000,000.
Your interest rate is extremely low at 2.5%.
[Hello, lock in effect.]
...but you'd like to pull out equity.
Your mortgage broker got three loan quotes:
1. 50% LTV at 6.5%.
2. 80% LTV at 7.25%
3. 90% LTV at 8.5%
What is the incremental cost of each loan?
Are there other factors you should consider?
Which should you do?
A. Nothing. Keep your current loan.
B. Pull out $100K with the 50% LTV loan.
C. Pull out $400K with the 80% LTV loan.
D. Pull out $500K with the 90% LTV loan.
PS -- If navigating real world challenges is something you want more of, DM us to discuss our Fall FastTrack cohort.
PPS -- Special thanks to Brian Abbott for joining class last week and bringing this topic to life by sharing insights into managing a $20B debt fund.
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