re: "leveraging their homes"
4 months ago, I moved and bought a home. Previously, I had rented. I seriously considered paying cash for the house. It would have given me a very satisfying and secure feeling to own my house and land outright. But, I would have had to sell a large fraction of my stock portfolio. So, I paid 20% down, and borrowed the rest (30Y fixed, at 6 5/8%). I was 100% certain that, in all conceivable futures, I could make better than 6 5/8% on my stock investments. So it made sense to leave the money in stocks, and borrow for the house. Would you count me as someone who is leveraging their home in order to buy (or in this case hold) stocks on margin? That's the way I look at it, and I think it was the rational decision. But it is only rational because the interest is tax-deductible, and the interest rate on my mortgage is well below what I can reasonably expect to average, over 30 years, in stocks. If I'd been buying a house in 1980, I would have paid cash. |
