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08-04-2011, 12:30 PM
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Say inflation strikes can you pay off your
mortgage w/ less money? IE You get a $100,000 mortgage inflation happens and the dollar is worth half can your mortgage be paid off with $100,000 of inflated money? Always wondered this
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08-04-2011, 03:08 PM
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No, inflation just means money buys less. Ie milk costs $3 now, it might cost $5 instead. You still owe $100,000 but you hope that your salary goes up because of inflation ie instead of getting $30,000 a year, you now get $50,000. This will just make $100,000 seem like less!
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08-05-2011, 04:19 PM
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Sorry Bron 357 but the answer is YES. You borrowed $100K and you pay back $100K plus any interest that has accrued since you took out the loan. So if you won that sum on the lottery you could pay the cheque into your account and then make out a cheque for that amount to pay off the loan. (A mortgage is just a loan with the property as security.)Inflation effects the future buying power of your existing money. So if you have $100K in the bank in 2011 and decide not to buy that Ferrari you quite fancy just to leave your money in the bank. Then inflation starts to push up prices and when you go to buy the car next year you might find that you are now a few thousand dollars short of the new price on yon car.
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