Mark Zuckerberg’s Home Has A 30-Year Adjustable Rate Loan Starting At 1.05%

Mark Zuckerberg
Mark Zuckerberg, the billionaire co-founder of Facebook, has refinanced his $5.95 million mortgage on his home in Palo Alto, California with a 30-yer adjustable-rate starting at 1.05% according to public records of the home. The borrowing costs that are availabe to high net-worth individuals are much lower if the person is willing to bear the risk of monthly interest rate adjustments according to Bankrate Inc. senior financial analyst Greg McBride.

“When you can borrow at a rate below inflation, you’re borrowing for free,” said McBride in an interview with Bloomberg. “This is the concept of using other people’s money and it preserves financial flexibility for the borrower.”

The average rate on a one-year adjustable mortgage was 2.69% as of July 12, which is up from a record low of 2.68% from a week earlier according to Freddie Mac.  The average rate of a 30-year fixed loan fell to a record low of 3.56%.  Zuckerberg’s Palo Alto home costs $7 million.  It was purchased in the name of a limited liability company according to a deed that was filed with the Santa Clara County Clerk-Recorder.

His house is a 5-bedroom,  5.5-bathroom built in 1903 on a 9,011 square-foot lot according to Redfin.  The house is two floors and is behind a gated drive.  It is about 3 miles from Stanford University and is three miles from Facebook’s Menlo Park headquarters.  Zuckerberg married his long-time girlfriend Priscilla Chan in the backyard of the home on May 19th.

Other homes in Zuckerberg’s ZIP code of 94301 sold for a median of $1.875 million ($968 per square foot), which is up 1.7% one year earlier.  Google co-founder Larry Page owns a house in the same area code and so did late Apple co-founder Steve Jobs.  First Republic Bank provided Zuckerberg with his mortgage terms.

“First Republic, like most banks, prices its credit products based on the strength and totality of the entire client relationship,” said Palo Alto real estate broker Ken DeLeon. “This is our approach with all of our clients.”  First Republic customer’s other wealthy clients include Stephen Ross, Peter Thiel, and William Bratton.

Zuckerberg’s relationship with First Republic replaces an adjustable rate loan from Morgan Stanley that was recorded in June 2011.  That rate was at 1.75%, which would have had a monthly payment of $21,256.  Zuckerberg received this loan around the same time that Morgan Stanley was seeking to managing Facebook’s IPO.  The mortgages were signed by Apercen Partners LLC partner Tom Van Loben Sels.  Apercen Partners LLC is a tax consulting firm based in Palo Alto.

Banks like to give home loans to high net-worth clients because they can pay off the loan quickly and have better credit risks and wealthy people choose to finance a home purchase rather than paying it off entirely in cash because of the overall low cost of mortgage debt and access to liquidity.  This gives them the option to plug money into more attractive investments.

This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at
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