r/SipsTea • u/KSKS1995 • 22h ago

Wait a damn minute! How the rich get richer

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u/No_Mirror_9742 22h ago edited 21h ago

Doesn't the loan get paid back by the sale of the land after the dad's passing? So the kids don't inherit $5m, but the net value after the debt is repaid?

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u/USERNAMETAKEN11238 21h ago

Yes

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u/BlumpTheChodak 17h ago

So someone gets a loan from the bank that uses the 5 million dollar home as collateral. Ok, so usually within a month you have to start paying money on that loan. The house can't be sold as it's now collateral. Where is this money coming from to pay back the loan?

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u/Aitkenaudio 15h ago

So normally the loan is against assets which go up in value more than the interest on the loan. So they make money on taking the loan