Mortgages seem to be every homeowners’ worst nightmare. However, some celebrities opt to get them, making home loans a financial foothold to get their dream home. But how do these celebrities afford their million-dollar homes without being in debt for the rest of their lives? We will answer that question soon enough. First, let’s talk about what mortgages are and why they aren’t the financial nightmare most Americans think them to be.
Mortgages Aren’t a Financial Nightmare.
Mortgages are a big deal for every American who owns a home. Mortgages are a form of debt where you ask an institution–in most cases, a bank–to essentially buy the property for you. The institution then gives you the property but lets you pay its cost and interest in increments so that you can afford it. If you can no longer bear the property’s mortgage, the institution then has the right to take the property from you.
So this begs to question, why don’t Americans buy the property once they have the money for it? The simple answer to that is most Americans don’t have the cash to outright purchase a home. Many Americans today can’t even afford a downpayment for a house.
However, once they actually have the cash for it, it would be too late. The market would be way ahead of them, and the cost of housing would have risen a couple of thousand dollars. So, in this case, mortgages aren’t the financial nightmare you thought they were. They are actually here to help you. Without mortgages, you would be chasing after a dream that you might never get until you’re old.
So how do celebrities finance themselves to not be forever in the debt of a mortgage? The answer to that is getting a mortgage when the interest rate is at an all-time low.
Celebrities With Mortgages
Two known celebrity couples have gotten a mortgage for their million-dollar homes. The first is Beyonce and Jay-Z, who refinanced their $88 million home using a $55.8 million mortgage from renowned bank Goldman Sachs. The second is Meghan Markle and Prince Harry, who got a loan for their home at $9.5 million. Both of these couples took mortgages when they knew that the interest rate they are going to get is at an all-time low. By getting mortgages with lower interest rates, they can afford the dream house they’ve always wanted.
Meghan Markle and Prince Harry both got the estate at a lower cost, making their mortgage rate much lower. On the other hand, Beyonce and Jay-Z chose to refinance their home, a strategy known as refinancing a mortgage. By refinancing their mortgage, they can have the flexibility of declaring what kind of agreement they can have with the bank. This means that Beyonce and Jay-Z can tell the bank how much they are paying for the mortgage and when they pay for it. This allows them to gain more from the mortgage than lose from it.
Using This Strategy in Your Life
This kind of strategy relies on three lifestyle principles. One of these principles is living life through investments. A celebrity like Jay-Z has this kind of lifestyle. He barely has any cash but has many investments in various industries such as clothing and music. This kind of lifestyle made him the one billion dollar rapper we know today. He literally makes his money work for him, not the other way around. The second lifestyle principle is refinancing loans.
The thought of refinancing loans is scary, but that only happens in the beginning. Refinancing loans are actually beneficial once you know what you’re doing. As long as you keep your eye on interest rates, you can never make a mistake in refinancing your loan. Thankfully, many modern apps can show you do that, so you don’t need to make manual calculations to see if the market’s interest rates are low or high. Additionally, if you have the money for it, you can always hire a financial advisor. This financial advisor can explain which loans you should refinance and which you should pay off.
Ultimately, these principles led to these celebrities buying their dream homes. It also led to their multi-million dollar revenues each year. However, you should know that this kind of lifestyle restricts how much cash you have, but not how much money. Remember that investments aren’t necessarily cash-on-hand. They are cash you can have in the future. So the last lifestyle principle you should is to be thrifty while you’re investing.
Investments are future money you can have at hand, but not today. What they are today are forecasts and calculations, not something tangible just yet. Although celebrities can throw lavish parties and spend their money on luxurious things, you can’t afford to do so. Spend only on valuable stuff until you get to the point when you get your investments back. At that point, feel free to buy any luxurious home you want the same way the celebrities in this article did.