Michael Lewis: Home Without Equity

Posted by admin on Monday, June 12, 2023

Meaning of Michael Lewis Money Quote: saying house payments are as good as rent if no equity is accumulated. Michael Lewis said:

 

 

“A Home without Equity Is Just a Rental with Debt” — Michael Lewis

 

 

This quote from Michael Lewis suggests that a home purchased with little or no equity built up is essentially functioning like a rental property, except with the added burden of mortgage debt that must be serviced. Some key points in interpreting his perspective:

• Lewis implies that if a homeowner has put little of their own money into the property through low or no down payment, they are really just renting from the bank through mortgage payments rather than truly owning the asset.
• He portrays taking on a large loan-to-value mortgage as leaving the homeowner with the costs and responsibilities of ownership but few of the benefits since they have little personal financial stake in the property beyond obligation of debt.
• However, building equity takes time and responsible use of mortgage debt allows many families to access stable, affordable housing. Reasonable experts disagree on the impacts of various levels of home loan leverage.
• A balanced interpretation is that the quote reflects Lewis’ caution around high-debt home purchases, but the best path for individuals depends on their priorities, budgets, market conditions and how mortgages fit into a holistic long-term financial strategy.

Categories: finance Tagged:debtequitymichael lewis