Cheap Money
Picture those commercials for low-interest loans. Sometimes you see posters in banks advertising the “current special of a 2% interest rate for well-qualified buyers” or something along those lines. Those low-interest loans are considered cheap money because it doesn't cost a lot to borrow it. Your cost for borrowing the money is relatively low. The money is cheap.
The opposite of cheap money is dear money, or tight money, when that same loan comes with a super high interest rate, and is harder to qualify for.
There's also a "cheap money" connotation that applies to companies raising cash for their operations by selling equity in themselves when the valuation of their stock is extremely high. Think: a hot biotech company with a high-flying stock issues equity and raises $200 million, even though it has just $10 million in revenues. That equity sale is also termed "cheap money."
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Finance: What is a Mortgage?345 Views
Finance allah shmoop shmoop What is a mortgage Well people
a mortgage is just dead it's alone but one with
special tax treatment For most people simply put Any interest
you pay on a mortgage to buy a home is
tax deductible Morty morton's inputs down a hundred thousand bucks
to buy a home that costs four hundred big ones
his mortgages three hundred grand at five percent interest per
year So that's fifteen thousand dollars a year he pays
to rent the money from the bank which he uses
to buy his dream home with the loop de loop
waterslide Morty earns one hundred grand a year and pays
tax on his last fifteen thousand of earnings soas faras
The irs is concerned since morty can deduct his fifteen
thousand dollars in interest against his earnings he does not
in fact earn taxable wages of one hundred grand annually
Instead he earns taxable wages of eighty five thousand dollars
a year Essentially with government is doing is sharing in
some of the cost of renting the money Taub i'm
ortiz home well why would the u s government be
so charitable Well because home ownership has been integral part
of the american dream since the u s of a
i po'ed in seventeen seventy six easy access to mortgages
and then home buying can be a hugely beneficial asset
In the vast majority of cases homes create family stability
a store of wealth and tax dollars for local schools
in the form of real estate taxes So don't feel
bad about splurging on that water slide there Morty Just 00:01:42.93 --> [endTime] remember you're doing it for the kids Hello
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