This tool allows you to illustrate the differences between funding a property purchase by paying cash vs. obtaining a loan. It considers if you could invest those funds in different environments while paying your mortgage out of lifestyle, what those fund might grow to. |
In this illustration, the first option that we're going to look at is paying cash for a house. So we have a risk tank that we can set a rate for with the half million dollar property value. We have a safe tank with a half million dollar property value. We have a loan tank with nothing in it because we're going to pay cash. And then we have the value of the house. So as we advance the animation, it's going to go through the 360 month time span and it shows us at the end of the 360 months where we would be. What would a risk tank investment grow to? A safe tank investment? What if the house depreciates? The house may appreciate or depreciate, so it doesn't really make a difference. Let's advance the presentation again giving the house an appreciation rate. We can also consider the cost compared to savings over the investment opportunities over different periods of time. After 15 years, we can review the calculations. Now, if we go out to the end of the term where we've paid off the mortgage, let's look at it.
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