It’s an interesting question: What kind of billionaire would take out a mortgage? When it comes to Mark Zuckerberg, the answer is easy: a smart one.
Despite being worth an estimated US$16 billion, Facebook founder Mark Zuckerberg actually has a mortgage.
According to Time magazine, Mr Zuckerberg has refinanced a US$5.95 million mortgage on his Palo Alto home with a 30-year adjustable-rate loan starting at 1.05%.
Bloomberg reported the average rate on a one-year adjustable mortgage was 2.69% at the time of Mr Zuckerberg’s residential purchase. So just how did he receive an interest rate that low?
According to the San Francisco Gate, interest rates can be lower if the person is willing to bear the risk of monthly interest rate adjustments – something that in this case is perhaps not so much of a risk.
So while we know how, the question remains: Why?
It is, of course, another of Mr Zuckerberg’s calculated moves. As the initial interest rate is far below the US inflation rate, Mr Zuckerberg can take the money he would have spent on the house and invest it elsewhere.
He is, in essence, borrowing for free.