Buying a $450,000 house in Phoenix, Arizona. I’m thinking of paying $300,000 down payment so my monthly mortgage is $1,000. I’m extremely risk averse and conservative and don’t feel comfortable paying 20% down ($90,000) in case I lose my job or want to take a lower paying job. I would sell all my VTSAX in my vanguard brokerage account ($3,000 in taxes owed at the time of sale) I drive a 2009 toyota camry House is 2000 sq ft 4 bedroom 3 bathrooms I’m single male Base salary: $130,000 Bonus: $30,000 NW: Vanguard Roth IRA $43,765.42 Vanguard Brokerage $261,212.62 HealthEquity HSA $13,638.86 Principal 401k $105,142.29 Robinhood $18,515.12 Amex Savings $32,127.60 Chase Bank $24,730.04
Put 150 down
That’s a $2000 mortgage. Seems a bit high for my comfort.
You have the money anyways so who cares what your month rate is. Plus this way you can help your credit score
No. In the event of a job loss you want liquidity not a big chunk of money tied up in your house.
I’d have $50k cash too
Honestly I think that is fine then, you won't be beating the market or anything once mortgage rates go back to normal but if you are comfortable AND still are maintaining a solid emergency fund I don't see a problem here.
$155k it’s in the description
I’ll transfer to HYSA after I’ve settled how much I want to make as a down payment
Wow! I didn't know about HYSA. I just looked it up and some of them don't even have minimum deposit/maintenance fee. Why should anyone put their money in regular savings account then? What's the catch here in HYSA?
While it is debatable if this is the best financial strategy (ie investing that money makes more sense generally), for your peace of mind and comfort it makes sense. Go for it op.
Incorrect Nvidia. Like said elsewhere. With a higher down payment you are amortising over 30 years with a lower loan value. What’s more 7% of 100,000 or 7% of 200,000?
Haha, one is saying that down payment doesn't affect property value and the other is saying it affects interest payments. They're both right, but each is misreading one another and thinking they're wrong.
Great job of saving 300k. Also I would say don’t opt for fixed 15 or 30 year. Go for 10 arm so that interest rate is lower and you could potentially pay off the 150k in 10 years
I’m trying to pay the $150k ASAP. I’m very good at living way below my means so thinking i’ll get 30 year and just save money and just lump sum pay off in 2-3 years
I disagree with the arm. You get nominal interest rate gains. And closing costs are much, much higher. Banks charge out the butt for an arm, eating a chunk of the gains. I don't understand why so many people . Unless the mortgage is huge it makes no sense.
But if you lost your job, you could just sell the stock and pay the mortgage then. Why do it now because you're afraid of doing it later? If you're worried about the stock market dropping, it could drop by half and you would still have enough to meet your mortgage payment for years.
I would hate to sell at a loss in desperate times
So you want to sell during this down market and non-desperate time? It looks to me like you're taking a guaranteed loss now to avoid maybe taking a potential loss later.
Take 30 year with 20% down, make accelerated payments when you can, starting month 1.
This is the right strategy. You never know when you might need the money. House is not liquid enough so you can access your money when and if you need it.
Do it for the piece of mind
Underrated comment
You're missing the point. Imagine the peace of mind knowing you can pay your mortgage for the next 2 (N) years without a job. Or use the money for an unexpected emergency. Liquidity has great value in times of financial stress. Make extra principal payment every month. Earn 4.9% in treasury bills.
Yes don't borrow unnecessarily over 4% interest rate. But also isn't Phoenix market in free fall why not wait some months?
🔮
I’m in Phoenix and it isn’t in free fall. Houses seem to be selling close to list and sitting 30-60 days. Prices seem to mostly be flat or down only slightly. I bought during the height of the boom and have been keeping track of the local market on a somewhat regular basis, especially as it relates to houses for sale near me since that impacts my values. They are still building like crazy, too. I think the houses most likely to fall are in less desirable areas and further out. Safe areas with good schools are always in demand. I do expect some declines over the next year or so, but nothing like they’re predicting. My 2 cents, FWIW.