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Mortgage Investment Property
Be a Smart Investor... Do the Math
by Attorney William Bronchick
Should I use cash or credit? ARM loan or fixed rate? Ten percent down or twenty percent? Should I pay down debt or keep a cash reserve? These are all good questions, and here's some of the answers.
Cash vs. Credit: The Concept of Leverage
In order to understand real estate financing, it is important that you understand the time value of money. Because of inflation, a dollar today is generally worth less in the future. Thus, while real estate values may increase, an all-cash purchase may not be economically feasible, since the investor’s cash may be utilized in more effective ways.
Leverage is the concept of using borrowed money to make a return on an investment. Let’s say you bought a h...
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