Dave B.
Maximus Ultimus Mostimus
Regarding mortgages...
Let's look at this from the perspective of assets and liabilities.
You own a house. The house has a value of $200,000. This means you have an asset of $200,000
.
You have a mortgage on the house. The mortgage is valued at $100,000. The $100,000 is the present value of the future mortgage payments. It is the current principal owed on the property. This means you have a liability of $100,000
So you have an asset of $200,000 and a liability of $100,000.
So please elaborate on this problem that exists with the mortgage?
Rd00
Asset?
An asset is something that puts money in your pocket every month, (Robert Kiosaki). A house is anything but an asset.
Thinking a house (that you live in) with a mortgage is an asset is the classic example of "Poor Dad" thinking.
Even a house that is fully paid off is not an asset. It wouldn't be, unless you're renting it out and it puts money in your pocket.
The only way your above example would be an asset would be if you rented that house out and had a positive monthly cash flow.
Cash flow is KING.
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