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Zuck refis at 1.05 percent

By Polyana da Costa · Bankrate.com
Monday, July 16, 2012
Posted: 5 pm ET

Facebook founder Mark Zuckerberg just got a phenomenal refinance deal on his Palo Alto, Calif., home.

The billionaire refinanced his $5.95 million mortgage with a 1.05 percent rate, according to a story by Bloomberg's John Gittelsohn and Dakin Campbell.

He got an adjustable-rate loan, which normally has lower rates than fixed-rate mortgages. But this is a superlow rate.

According to Bankrate's weekly survey, the average rate on the 1-year ARM was 3.04 percent last week.

Why did Zuckerberg get such a good deal? Let's just say banks "like" having a customer with a $14 billion net worth. It's not uncommon for banks to provide lower-than-market rates for their high-net-worth clients.

In reality, Zuckerberg doesn't even need a mortgage. But think about it. When you borrow at such a low rate, it's almost like getting free money. He will likely invest these millions elsewhere, hoping the return is higher than 1 percent. As long as he doesn't invest it all on Facebook shares, the plan will probably work.

Zuckerberg paid $7 million for his five-bedroom, 9,000-square-foot home in March of last year. This is the same home where Zuckerberg recently tied the knot with his longtime girlfriend, Priscilla Chan, a day after Facebook went public.

The refinance saves Zuckerberg about $2,000 per month, reducing his monthly mortgage payment to about $19,000. This is pocket change for the 28-year-old billionaire, but as a savvy investor, why pass on the savings?

What about you, how much money would you save if you refinanced your mortgage? Bankrate's mortgage calculator can help you figure that out.

Follow me on Twitter @Polyanad

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25 Comments
Rob
July 20, 2012 at 6:51 pm

This great deal for Zuckerberg is because he has billions of dollars. Banks deal in dollars and want some of Zuckerbergs.

If you go to your local car dealer and buy a new car you get one price. If you buy 10 new cars you get a much better price, no matter who you are.

No one gave Zuckerberg his billions, he earned them. It's unfortunate for me that I didn't have the skills and drive that Zuckerberg has to make billions. That's not Zuckerberg's fault and he doesn't owe me a dime. Regardless of what the liberals believe, we are not all created equal (some of us are just lazy) and we are not entitled to share in the earnings of others.

Italian
July 20, 2012 at 3:54 pm

Regarding tipping in Italy, it is not customary to leave a certain percentage as a tip as in most of Europe, but it is polite to leave something. The guy is a billionaire, he could have left a couple euros at least to show that he appreciated the service. Most tourists do leave a small amount of change.

Party of Seven
July 20, 2012 at 1:26 pm

Robert--Tipping is not customary in Italy.

David
July 20, 2012 at 12:50 pm

All these comments are about why a rich man gets a low rate or why he is concerned to save..Heres a random idea that most with high incomes go by. To make money is to save money, so why not save on interst on a 5.9 million dollar house. Why he got approved for that amount compared to the everyday person? Because he could if wanted pay that house off in full when ever he wants..don't think the advage person could pay off their 150k house in one payment....

Be smart people not ignorant and hateful on someone else's success

Ron
July 20, 2012 at 12:32 pm

RICH - Because the banks have been given the money through the so-called stimulus program to HELP those persons who have been most affected by the housing collapse. They are happy to give money to those who don't need it but have virtually made it impossible for those who have been struggling as a results of their mistakes - not ours. This has nothing to do with working hard and being successful. Most people are hard-working and still don't get a handout, nor do we expect one. This is the American way!!!

rich
July 20, 2012 at 11:44 am

Why is everyone so envious of everyone else? He worked hard and was successful, seriously, what is wrong with that? It used to be instead of envy and jealousy people would work hard towards the same outcome. Granted you probably wouldn't get that far but the possibility was there. Now it's just look what he has? I want it, he should give me some of what he has. Where's my check? Instead of working towards at least being successful, look at all the people that are employed as a result of the risk he took.

robert thomas
July 20, 2012 at 11:11 am

Wanda Woodruff: With 16 billion worth of assets and some of those invested with a specicfic lending institution, paying him rather than charging him for a loan with still leave that institution with with an enormous investment advantage. Matter of fact, giving him the entire amount free, would still leave that bank in a positive position. As far as Zuckerberg is concerned, either way doesn't make a fractional difference in his life. beyong numerical critical mass, there is zero personel advantage on anything accrued. It's meaningless.

robert thomas
July 20, 2012 at 10:48 am

stringent banking regulations have been instituted by the Obama administration, not Bush. It's bazaar that a man worth an inconcievable amount of money would in any way be concerned about maximizing assets through financing. Is this the same fellow who stiffed a Waiter in Rome while on his honeymoon?. Does he realize that it would be impossible to spend away his assets without increasing them? I don't begrudge wealthy people like many do, but in this guy's case voting democratic makes him a hypocrite. My father once told me"vote your wallet". If the govt. conficsated every additional cent this guy makes going forward, it wouldn't change one thing for him, but higher tax rates for average people is the difference between making it and not making it.

Wanda Woodruff
July 20, 2012 at 10:22 am

See how the rich get what they want. The average joe would never get a mortgage rate that low. So why not tax them at a higher rate they can afford.

Brillante
July 20, 2012 at 9:20 am

What a great story. I'm going right down to my bank and asking them to refinance my mortgage. I'm employed, make over 60k easily, and have low debt. I wonder if they'll give me a break? Why wouldn't they Bush and the Republicans deregulated the banking industry so that they could make these types of deals, right? The BIG question is for WHOM?