How do wealthy people buy expensive homes?  Do they put a huge
down-payment down to reduce the size of the principal being borrowed
and maintain lower mortgage payments on a higher priced home?  If so,
what percentage down payment is realistic in their strategy on an
$850,000 home?  If they don't put a huge down payment down when
buying, do they simply choose to have $6,000 mortgage payments?

The trade-off between a large mortgage and a lump-sum payment
(assuming one can afford to pay in cash) is the known amount of money
lost to interest payments versus the potential income generated by the
money that you don't pay out right away if you opt for a mortgage.

There are tax incentives to maintaining a mortgage rather than buying
a house outright but even without considering these, it makes more
sense to pay a mortgage.  Interest rates are very low right now making
the cost of a mortgage quite low.  Also, with the market in recession
there is more room for market investments to go up in value, though
you can find market analysts with opinions all over the map.

Even without going into details of the housing market, one can reason
that wealthy folk would opt for the mortgage.  Less wealthy people
need a mortgage because they couldn't afford a house otherwise and
need the security of a known monthly payment.  Rich folk on the other
hand would opt for a mortgage for the opposite reason - they can
afford the risk that investments will go belly-up but know that from a
historical perspective, the pay-off is well worth the risk for those
who won't be ruined by market disaster.


Is that the sort of answer you were looking for?  If not, let me know
what you do want and I'll get back to you.

-Haversian

Good answer.  Thank you!