I found this lovely house in Castro Valley. My offer of 1 million got accepted and I'm in the inspection period. I can only put %10 down and the lender could get me 900k loan with %4.25 7 year ARM. That was the best I could get, boa and wells fargo only offered 700k loan with slightly better rate. My partner and I have good stable jobs with total liquid TC of 450k this year. (It was 150k last year, that's why we don't have much cash or assets.) We live in a shitty rental apartment with $2500/mo and our living condition is not good. We really want to move to our own house and improve quality of life as it's getting depressing. We can save about 150k in the upcoming year. My lender says we can put down this money and refinance next year with the cost of $1500. Should we buy the place now with high rate, or wait and buy next year? There's also no guarantee that rates don't go up next year.
Are you sure that a house in Castro Valley worth 1M? Do not forget Alameda County is the worst in the Bay
The school rating is very good there. The nearby houses were sold similarly
I'm not sure though, this is the comp that my agent sent. Might have been cherrypicked.
More important thing is how did your Tc go from 150k to 450k in a year 😂
I also want to know!
He got married to a 300k wife?
7 year duration is the most concerning. The monthly mortgage will be crazy high and if one of you lose the job you'll be in trouble, especially since you mentioned you don't have a lot of assets.
We won't lose jobs. High performing in pre-ipo and public tech giant. Why 7 year is most concerning?
I already said why
Do you love the house? It sounds like you really want to be homeowners. Go for it. Don't suffer another year.
Yes I love it and it's in between our jobs. Commute gets so much better for one of us.
I think it’s a reasonable rate. Will wait a while for it to go down
So you're saying I wait and not buy now?
He is saying not to wait
You should look at a 30 year bank rate charge before terming 4.25% high. 2% rates were the product of housing meltdown. Historically rates were in the 6-8% range. In the 90s, the norm was 8-12% which was lower than the 11-14% of the decade before.
Relatively high. Here people talk about %3.75 fixed.
3.75 vs. 4.25% is a .5% difference. You’re putting 10% down so you’re getting a higher rate compared to 20% or 30% down (greater risk) Many people buy down points. You should probably spend some time studying how banking rates work before commuting to a $1m loan. Cheers.
Can you get a HELOC or 2nd mortgage for the remaining amount rather than a single $900K mortgage?
I'll ask my lender. It may make sense for my case. I get cash bonus in Sept and first year RSU in December. I can put all of that cash in HELOC.
This is what we ended up with. Google 80/10/10 loan
In a school where we wrote from right to left. Good catch
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Recession looks imminent and so does a rate cut in next year. Its a tricky situation imo
If recession happens, home prices drop, but interest rates have been high for a while and recession may happen 2 year from now. If recession does not happen, interest rates remain the same or better yet go down. In either case refinancing with injecting more cash seems reasonable.
Interest rates don’t go up in a recession. That doesn’t make a lot of sense