AN– First, I must admit an error and note that the annual cost with the last example was $2,611.81. Sorry, had referenced the wrong cell on one of the calcs. Now, onto your latest plea to support your case…
If savings rates go up, so will loan rates. I understand that following loan inception, the loan rate stays what it is and what happens with the savings rate happens, but all we can start with is what the rates are today and I think you’re really pushing it. Please tell me where you can get a plain old savings account at 5.5% and a jumbo loan at 6.2% (really!)
Even so, I’ll entertain your new criteria. The cost would now be $1,325.46 annually, 110.45 monthly. If you keep making up rates you can’t get, we should be able to get it to break even…
And no, it’s not worth it to me at even $200 bucks a month to keep $400K liquid. As I mentioned before, I’d certainly keep an emergency fund and sdrealtor’s suggestion about a line of credit isn’t a bad one if I was really worried I might need to come up with a few hundred kilobucks suddenly.
If it’s equity erosion you’re worried about, whatever happens with that, happens with that. If your house loses $200K (or more), you will be out that money if you need to sell–doesn’t matter if it’s in equity or the bank. The *only* thing that would make that different is a willingness to walk away from a house if you were sufficiently underwater. I’m hoping that’s not your rationale.
