Facebooks Zuckerberg gets 1% 6mil re-Fi LOL

http://finance.yahoo.com/news/zuckerber ... Q--;_ylv=3

He wants to thank all you saver saps earning 0 on your bank savings accounts. LOL

"The Facebook Inc. (FB) founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property. "

Wow. Helps to be one of the rich and powerful. Although I think I am stealing money with my 0.9% auto loan and 4.5% home mortgage.

But in Zuckers tax bracket, his effective mortgage rate is probably about 0.5% with the deduction. Not too shabby.

A guy worth several billion dollars finances a $6 Million home with an ARM? :woo hoo:

I wonder what he knows that I don't that he is risking an ARM. I hear all these scares about a worthless dollar around the corner. Sounds like the man thinks low interest rates will last a long time.

There isn't any risk at all for Zucker, he could sell 0.1% of his Facebook shares and pay it off anytime. They do it for the tax deduction. Buffet does the same thing, borrows money at low rates instead of selling his shares triggering taxes. And write off the interest cost if it is backed with home equity.

LOL wrote: There isn't any risk at all for Zucker, he could sell 0.1% of his Facebook shares and pay it off anytime. They do it for the tax deduction. Buffet does the same thing, borrows money at low rates instead of selling his shares triggering taxes. And write off the interest cost if it is backed with home equity.

Exactly. I had a 350k interest only 1st on my house for 10 years because I needed the write off and the payment was low so I could use the extra cash to invest in my business.

Some of you guys are missing the point.

ARMs have traditionally always cost the consumer less than fixed mortgages, except for the scam ARM from a few years ago, but what thinking reading individual gets one of those. Usually an ARM adjusts every x years, with a lifetime and/or adjustment limits.

I have had many ARMs and paid a heck of a lot less as a result, exp in the 90's and turn of the century.

So if you have gabillions of dollars or even quite a bit less. Get an ARM, which is almost always less than the fixed at the time, at 1% or 3% or whatever and invest the money you saved in something at a much higher rate of return. When your fixed or reasonably secure rate of return is less than the mortgage rate, you simply pay your mortgage to get that alternative rate of return.

I would assume that unless all of you are dirt poor that you do the same thing. Many people here have mortgages, but also have retirement accounts or IRAs. The only reason you keep sending money to your IRA vs. paying your mortgage down is you assume you will make more than the mortgage interest on the IRA, esp with tax breaks. You may be wrong, esp lately and may pay for this.

Also at 1% or even 3%, this is lower than inflation most years, this is called free money, someone just gives it to you and expects no actual interest in return, is even paying you to hold on to it. The money the don't make him pay is worth more later even under his mattress than paying the mortgage. And since a mortgage is essentially like an option to buy at a certain previously agreed upon price, you can also get any RE gains from the property. Now this is 1/5 of an acre in some neighborhood, so it is all artificial value, but will likely stay inflated for some time, even worth more because he lived there.

This is not news, this is basic finance. Most of us do it and he just got a better rate because he is much more reliable than anyone posting or reading here. The worst his interest on that land will be is around 10%, and he would have paid it off well before it hit that point or he will have investments making more than 10% and keep on trucking. There is next to NO risk in his loan, really only benefit.

if the interest is 1% and he uses the mortgage interest deduction and he has an effective rate of 15% then his deduction will be 15% of the dollar amount he paid in interest, making his rate give or take 0.85%, not .5%. Again we are all doing this too. If he pays 50% in taxes, well then it would be .5%.

Popcorn, you make some good points. I was always afraid of ARMs and payed thru the nose for fixed mortgages, 6 percent. I have friends that did fine with ARMs and were happy. Its the low initial teaser rates that burned people who didn't read the contract or check into realistic rates.

One thing with Zucker's deal is I believe only the first $1Mil is tax deductible, so maybe not a tax maneuver. 1% money is cheap though, and he can re-Fi or pay it off anytime.

Would you loan money to someone for 30 years at 1% interest unless it was a ARM?

I wonder if it is a quid pro quo deal. Like the mortgage financier just happens to be the bank that Facebook uses. US congressman and senators got sweetheart deals before the real estate bubble burst.