Quote:
Originally Posted by twdm
Thirdly, leverage. The benefit of getting a mortgage is some average Joe with a $50k annual salary can borrow way more than what he makes and put that down as an investment. In this way, gains are multiplied but so are losses. Can I do that without a mortgage? Of course I can. I currently have 3x my annual salary in unsecured loans at rates even less than what you guys pay for mortgages. Can someone leverage at the same ratio as a mortgage? Probably not, but that is because the lender can foreclose your home if you default.
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I agree with everything you wrote, except for this. I just renewed my mortgage late last year at 2.1% variable. My HELOC is at 3.2%. I don't understand how your unsecured loans can have a lower rate than a secured one. Also, the bank is much less willing to lend you $500K for stocks than for a mortgage, probably because of a lack of collateral.
The only person I know that can borrow significant amounts for investing (millions) without collateral has his very wealthy parents as a signatory.