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 bank is providing the funds for the second owner, paid to the previous owner, to complete the sale. The original owner gets paid the full amount of the sale immediately, and the second owner owes that bank.
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