Say a house that’s worth half a million is bought by its first owner; first owner paid all mortgage off at some point and sell it to the 2nd owner, assuming now the house is worth one million.
Assume the 2nd owner pays $200 000 as down payment and the rest in the form of mortgage. The first owner should walk away from the deal with at least half a million cash since it’s paid off. My question is where is that money from?
In: 5
The seller would walk away with the full million sale price if the home is paid off.
The buyer pays the $200k down payment and the bank they’re borrowing from for their mortgage pays the other $800k. The mortgage is the loan to repay the bank that $800k (plus interest) over next 30 years.
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