I am completely lost on the concept of buying a home and the selling it before the mortgage is paid. How does this make money/contribute to a new mortgage?
In: Economics
You buy a house for 100. Every month you pay the bank 1. After a while, you still owe 69. You sell the house for 120. The bank gets 69 and you get 51. You made 20!
Now if there’s an interest rate, you made less than 20, but the math there is harder.
I bought a house a while ago for 180,000 and I paid 1,000 every month on my mortgage. After 4 years in the home, I’d paid 48,000, but I still owed the bank 165,000. Ouch. That’s the interest rate. BUT I SOLD IT for 220,000! The bank gets 165,000 and I get to keep the 55,000 left over! I got all my money back, and I made 7,000. Very cool.
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