With another 50k or so in down payment of house, it can bring down interest rates by 1/8th = 0.125% Considering a 7/1 or 10/1 ARM, is it better to put in extra 50k to get 0.125% discount? How much would be net gain due to the 0.125% on a loan of about 850k in the course of the loan (7 or 10years of ARM)? Or invest the 50k on stocks (maybe FAANG) or something else and its return might be better financially?
I realized some time ago that thinking house as investment doesn’t make a lot of sense in the near term. If I put 200k in investment and assumes 16k return. If I put in mortgage, it saves 20k. It sounds like putting in mortgage is better, but you need to realize the 20k save is only realized when the mortgage matures in 30 years, where it’s 20k in future value. If putting money in mortgage can have immediate impact by reducing your monthly payment, than that makes a lot more sense to do so. My recommendation is to invest. When your arm rate expires, refinance with extra money from investment to make your monthly go down.
Why don't you use a mortgage calculator to see how much you'd save with the discount vs not. And then use a compound interest calculator to see a theoretical market return on $50k at say 6%. Then you can compare those. Don't forget that putting the $50k in the house also locks it there until you sell. Since you're considering an ARM I don't think you intend to stay long but it's a consideration.