Home Loan with EquityMortgage with equity
5 million because my neighbours were selling their same home for $1. 5 million.
So my upfront capital invested increased from $250,000 to $750,000. Fountain equity is nothing but if I have an asset that' s worth $1. 5 million, and I have $750,000-- that was my original mortgage onto that asset-- then what I' m let with is the equity. And so my equity just trebled.
From $250,000 to $750,000. I will show you in this tape what you can do with this equity. It'?s not real money. I' ll show you that you can actually convert it into real money by using something known as a home equity loan.
So, what's a home equity loan? I' m saying, wow, bench, I got this $750,000 equity. Wish I were wealthy, but I don't have it in this. But I want to do something with justice. So our only demand is that you have $250,000 - or our only demand is that you have 25% equity in your home, right?
Cause they want a pillow in case you can't afford it and they get the place back, and they have to lock it out and sell it at auctions, and so on. They said, well, we're willing to loan you up to 75% of the value of your home. So, what's 75% of the value of my home?
So, let's see, 1. 5 x 75%, let's see that would be $750,000 plus half of $750,000. We' ve loaned you $750,000 so far. That' what? 300, that's 250 plus 75, up to $325,000 more you canorrow. Well, I'm taking that cash basically out of my house's equity.
Let's say I accept this loan. $325,000 in hard cash. I want it. Allow me to make another show, another record. Mr President, I have ceased to use the term review, although that was the initial intention of this whole debate. Keep in mind that debt plus shares equals asset value. So, now I have a $1. 5 million home, and I also got $325,000 worth of money from the deposit, so we can call this 325K worth of money.
What are my obligations now? Well, not the whole page, we'll have equity down here. $750,000. Then I took out a new loan to get that $325,000 in pay.
This is $325,000. That was a home equity loan. against the equity I have in my home. That was the equity in my home. So, what's the remaining equity? Those are payables. Justice is what you have left.
I' ve got $1,825 million in asset values, minus - what are my payables now? Negative $1. 075 -- that was the maximum I could lend -- payables. Asset values less payables are the equity of the owner. I' ve still got $750,000 in equity. When I only make one transactions where I get money in return for debts, my equity should not be changed.
Well, I have this money, and I feel wealthy because I've never seen numbers like $750,000. By the way, this neighbour, this new neighbour who just purchased this home right next-door for $1. 5 million, he just purchased a nice new Hummer. and I' m gonna go out, and I' m gonna pay $100,000 for a lobster.
Suppose the neighbour took a $100,000 round-the-world holiday. Neither have I, because I did nothing but sitting on my home and earning $500,000 last year, I sense that I also earn a $100,000 holiday. So, what I'm doing is taking $100,000 of that money. I am now alone with only $225,000, and I have the great privilege of going on holiday.
It doesn't appear on your financial statements. We had $325,000 in hand money. We now have $225,000 in pay. Our overall wealth has fallen by about $100,000. That'?s'cause we spend $100,000 of our money. So, what will the payables and the equity be? Well, the debt won't turn around, will it?
That $100,000 will all come from my equity. So, suddenly, I don't have $750,000 anymore. This is not just the bottom line for my home. It'?s kind of my whole personality thing. Now my whole person-to-person record, what just happen?
Just took some of the initial equity I had. Then I took $100,000 of it, turned it into money, and just went on a great one-year holiday. This is what home equity is. Now, the value of their home has risen, and they have lent themselves against the value of their home.
Then they took out money, and they used that money to buy their lobsters, go on leave to buy turned out clothing, whatever.