RSteve
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- Feb 9, 2008
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One of my friends decided to buy a new car using equity in his house. It didn't make sense to me, but maybe it does. He owns his home, without a mortgage. It's a nice house in the suburbs, probably would sell for $450,000. He's been there for about 30 years. He traded in, I'd guess, about a five year old Lexus with low miles. He's like me, a widower. in his late 70s and doesn't drive much. I'm puzzled why he decided to buy a new car, but he said he wanted one more new car. He's sufficiently well fixed that he could have paid cash for the new car.
Given his age, I'm surprised the bank gave him a 30-year mortgage. His rationale was he wanted a new car, the bank gave him a < 3% loan, his monthly mortgage payment will be less than $100 and within three years his house will likely appreciate the amount of the loan. Does this make sense?
Given his age, I'm surprised the bank gave him a 30-year mortgage. His rationale was he wanted a new car, the bank gave him a < 3% loan, his monthly mortgage payment will be less than $100 and within three years his house will likely appreciate the amount of the loan. Does this make sense?