Smart Strategy For Purchasing a House?

[Omega Point]

My wife and I will probably purchase a house next spring/summer and have up to $500K for a down payment. However, our thoughts are to put as little down as possible in order to conserve and invest our cash. We are buying next year because we believe housing will be close enough to the bottom and we plan on living in the house for about 20 years. We are putting down as little as possible because we feel next year will probably be the bottom for mortgage rates before they begin to skyrocket. We are foreseeing a time (within two to three years) when interest rates paid on CDs will be higher than our mortgage rate so why not have the bank pay us for paying back their mortgage loan?

Even if this scenario doesn’t play out, we can’t see housing values going up in value for a long time so we don’t want to stick cash in asset that won’t provide a return for many years. We are also considering a 50 year fixed mortgage, we don’t care if we ever own the house and just want low fixed monthly payments. When we sell in 20 years, the house will likely be worth more than what we purchased it for so we’ll have the appreciation plus the return on our cash that we didn’t sink into the house. (We are not necessarily going to invest our cash only in CDs.)

Smart or foolish home purchasing strategy?

[Ren]

You may want to re-think the spring/summer time frame. Even in down markets, there is more buyer competition and higher prices during that time. If I was in your position, I would guesstimate the difference in payments you would have by waiting until next fall/winter, including likely higher interest but also possibly a substantially lower price (depending on the area). I would personally wait, even if it means paying 8%. I don’t want to get into a spring bidding war on top of already inflated prices.

[Ren]

You may want to re-think the spring/summer time frame. Even in down markets, there is more buyer competition and higher prices during that time. If I was in your position, I would guesstimate the difference in payments you would have by waiting until next fall/winter, including likely higher interest but also possibly a substantially lower price (depending on the area). I would personally wait, even if it means paying 8%. I don’t want to get into a spring bidding war on top of already inflated prices.

[Ren]

You may want to re-think the spring/summer time frame. Even in down markets, there is more buyer competition and higher prices during that time. If I was in your position, I would guesstimate the difference in payments you would have by waiting until next fall/winter, including likely higher interest but also possibly a substantially lower price (depending on the area). I would personally wait, even if it means paying 8%. I don’t want to get into a spring bidding war on top of already inflated prices.

[Ren]

You may want to re-think the spring/summer time frame. Even in down markets, there is more buyer competition and higher prices during that time. If I was in your position, I would guesstimate the difference in payments you would have by waiting until next fall/winter, including likely higher interest but also possibly a substantially lower price (depending on the area). I would personally wait, even if it means paying 8%. I don’t want to get into a spring bidding war on top of already inflated prices.

[Ren]

You may want to re-think the spring/summer time frame. Even in down markets, there is more buyer competition and higher prices during that time. If I was in your position, I would guesstimate the difference in payments you would have by waiting until next fall/winter, including likely higher interest but also possibly a substantially lower price (depending on the area). I would personally wait, even if it means paying 8%. I don’t want to get into a spring bidding war on top of already inflated prices.

[34f3f3f]

Some time ago I had a similar idea of providing cash to a lender as collateral to lend back to me. Although I didn’t need a mortgage, I wanted the interest as a deductible. The bank thought it was a wonderful idea, but of course in those days they were falling over backwards to lend under any terms. I think if I’d said my income is derived from selling rocks from Mars, once I’ve built my space ship, they would have giggled delightedly and said “why of course you can have a loan”. Seriously though there are better qualified people here than me on how to structure a loan, and I echo above that you may want to wait a little longer.

[34f3f3f]

Some time ago I had a similar idea of providing cash to a lender as collateral to lend back to me. Although I didn’t need a mortgage, I wanted the interest as a deductible. The bank thought it was a wonderful idea, but of course in those days they were falling over backwards to lend under any terms. I think if I’d said my income is derived from selling rocks from Mars, once I’ve built my space ship, they would have giggled delightedly and said “why of course you can have a loan”. Seriously though there are better qualified people here than me on how to structure a loan, and I echo above that you may want to wait a little longer.

[34f3f3f]

Some time ago I had a similar idea of providing cash to a lender as collateral to lend back to me. Although I didn’t need a mortgage, I wanted the interest as a deductible. The bank thought it was a wonderful idea, but of course in those days they were falling over backwards to lend under any terms. I think if I’d said my income is derived from selling rocks from Mars, once I’ve built my space ship, they would have giggled delightedly and said “why of course you can have a loan”. Seriously though there are better qualified people here than me on how to structure a loan, and I echo above that you may want to wait a little longer.

[34f3f3f]

Some time ago I had a similar idea of providing cash to a lender as collateral to lend back to me. Although I didn’t need a mortgage, I wanted the interest as a deductible. The bank thought it was a wonderful idea, but of course in those days they were falling over backwards to lend under any terms. I think if I’d said my income is derived from selling rocks from Mars, once I’ve built my space ship, they would have giggled delightedly and said “why of course you can have a loan”. Seriously though there are better qualified people here than me on how to structure a loan, and I echo above that you may want to wait a little longer.

[34f3f3f]

Some time ago I had a similar idea of providing cash to a lender as collateral to lend back to me. Although I didn’t need a mortgage, I wanted the interest as a deductible. The bank thought it was a wonderful idea, but of course in those days they were falling over backwards to lend under any terms. I think if I’d said my income is derived from selling rocks from Mars, once I’ve built my space ship, they would have giggled delightedly and said “why of course you can have a loan”. Seriously though there are better qualified people here than me on how to structure a loan, and I echo above that you may want to wait a little longer.

[SD Realtor]

Omega that is an interesting strategy and I have been pondering about whether to pursue a similar plan when I buy as well. I watched my parents invest alot of money in bonds in the 80s. Every few months they would put as much in as they could to purchase 30 year bonds and those were fantastic income generators for them. So your strategy makes alot of sense in an environment where you sense double digit inflation rates in the future.

By the same token, putting a buku downpayment and paying off the home early is not bad because of all the money you save in not paying any interest. One simply needs to plot the data to see what works better for them.

Anyways, not a bad idea.

[SD Realtor]

Omega that is an interesting strategy and I have been pondering about whether to pursue a similar plan when I buy as well. I watched my parents invest alot of money in bonds in the 80s. Every few months they would put as much in as they could to purchase 30 year bonds and those were fantastic income generators for them. So your strategy makes alot of sense in an environment where you sense double digit inflation rates in the future.

By the same token, putting a buku downpayment and paying off the home early is not bad because of all the money you save in not paying any interest. One simply needs to plot the data to see what works better for them.

Anyways, not a bad idea.

[SD Realtor]

Omega that is an interesting strategy and I have been pondering about whether to pursue a similar plan when I buy as well. I watched my parents invest alot of money in bonds in the 80s. Every few months they would put as much in as they could to purchase 30 year bonds and those were fantastic income generators for them. So your strategy makes alot of sense in an environment where you sense double digit inflation rates in the future.

By the same token, putting a buku downpayment and paying off the home early is not bad because of all the money you save in not paying any interest. One simply needs to plot the data to see what works better for them.

Anyways, not a bad idea.

[SD Realtor]

Omega that is an interesting strategy and I have been pondering about whether to pursue a similar plan when I buy as well. I watched my parents invest alot of money in bonds in the 80s. Every few months they would put as much in as they could to purchase 30 year bonds and those were fantastic income generators for them. So your strategy makes alot of sense in an environment where you sense double digit inflation rates in the future.

By the same token, putting a buku downpayment and paying off the home early is not bad because of all the money you save in not paying any interest. One simply needs to plot the data to see what works better for them.

Anyways, not a bad idea.

[Author]

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