[quote=livinincali] . . . Almost everybody thinks that somehow they can win at this game of borrow low and earn a spread on the return. Of course plenty of people end up rich doing that and plenty of people end up in bankruptcy doing that.[/quote]
livinincali, investors CAN win at this game, but will not be able to open both accounts simultaneously. If they have good credit and can otherwise qualify, they could theoretically take out a ~$200K 3.5% 30-yr FRM or a 2.75% 15-yr FRM TODAY and recover enough from their *safe* investments IN THE FUTURE to pay or almost pay these mortgages every month.
Joe and Jane6p soon-to-be-retiree or retiree could take these steps in the above order, and if interest rates eventually rise, they would likely be able to find safe passive investments which could very well pay them enough monthly to make their mortgage payments (and still keep the principal of their investment intact).
Lots of Joe and Jane6p’s in the past were able to pay down their (4-8% FRMs) for years, but this was undoubtedly on smaller balances (usually under $100K). It’s all relative … the borrowers of yesteryear had double or more the FRM interest rate of today but owed half or less of the mortgage balance that the bulk of today’s similarly-situated borrowers owe.
It is doable … if steps are taken in the right order and interest rates later rise at 3 or more points.
