Would you have done this?

[sdcellar]

Also, I neglected to mention that being the conservative guy that I am, I would certainly keep some of the cash liquid if I didn’t already have reserves (as some others have pointed out).

Alex– Did your workmate leave himself such reserves? (understanding there’s a limit to what people will divulge…)

[sdcellar]

Also, I neglected to mention that being the conservative guy that I am, I would certainly keep some of the cash liquid if I didn’t already have reserves (as some others have pointed out).

Alex– Did your workmate leave himself such reserves? (understanding there’s a limit to what people will divulge…)

[startingout]

Maybe he plans on living in this home for the rest of his life, come hell or highwater. Even if he took a paycut or changed careers, he could still afford his mortgage.

Maybe he didn’t buy it to make money off of it or improve his portfolio- maybe he bought it to live in.

I too think that this market is insane, but not because if I were to buy a house tomorrow it would cramp my wallet’s style. I think it’s insane because it’s putting the security of owning a home out of reach for our next generation.

[startingout]

Maybe he plans on living in this home for the rest of his life, come hell or highwater. Even if he took a paycut or changed careers, he could still afford his mortgage.

Maybe he didn’t buy it to make money off of it or improve his portfolio- maybe he bought it to live in.

I too think that this market is insane, but not because if I were to buy a house tomorrow it would cramp my wallet’s style. I think it’s insane because it’s putting the security of owning a home out of reach for our next generation.

[an]

the 5.3% savings rate I’m referring to are from the online banks. They all range between 5.1-5.4%. So I don’t think it’s aggressively high. I might be off base w/ the mortgage rate though. I got that off Zip Realty and a recent loan application I made and they ran my credit. Anything great than savings rate has risk, so no, you can’t get 10% with no risk.

But riddle me this, let say you have to circumstance, one is putting the whole 400k in the down payment and one don’t. Lets assume that the mortgage payment is 5k/month for the one that did and 7k/month for the one that don’t. The house dropped 400k but this person got a fixed loan so he/she doesn’t care and will be staying put for a long while. If this person happen to lose his/her job and not enough cash to may for everything, which situation would you like to be in. With the person w/ 400k in cash, you can draw down that cash while you wait to find another job while the person w/out 400k will have to sell since he/she can’t refinance and the equity is all gone or the rate is at a point where he/she can’t qualify for the new loan. That’s why I think having liquid cash is a better idea for life’s unexpected moments.

[an]

the 5.3% savings rate I’m referring to are from the online banks. They all range between 5.1-5.4%. So I don’t think it’s aggressively high. I might be off base w/ the mortgage rate though. I got that off Zip Realty and a recent loan application I made and they ran my credit. Anything great than savings rate has risk, so no, you can’t get 10% with no risk.

But riddle me this, let say you have to circumstance, one is putting the whole 400k in the down payment and one don’t. Lets assume that the mortgage payment is 5k/month for the one that did and 7k/month for the one that don’t. The house dropped 400k but this person got a fixed loan so he/she doesn’t care and will be staying put for a long while. If this person happen to lose his/her job and not enough cash to may for everything, which situation would you like to be in. With the person w/ 400k in cash, you can draw down that cash while you wait to find another job while the person w/out 400k will have to sell since he/she can’t refinance and the equity is all gone or the rate is at a point where he/she can’t qualify for the new loan. That’s why I think having liquid cash is a better idea for life’s unexpected moments.

[hipmatt]

Have you seen the markets lately? hardly stable or a guaranteed 10%, I would have no prob, putting down the 400k.

[hipmatt]

Have you seen the markets lately? hardly stable or a guaranteed 10%, I would have no prob, putting down the 400k.

[SD Realtor]

Agreed with your point AN however my assumption was that this person does have rainy day money. The original post said that the 400k that the person sunk into his new home was all from the sale of his previous home.

Absolutely agreed that if there is no rainy day money then no this shouldn’t be done. Again, I made that assumption based on what was written in the post. Conversely the guy could/should put the 2k that he is saving each month, away or invest it conservatively as well.

SD Realtor

[SD Realtor]

Agreed with your point AN however my assumption was that this person does have rainy day money. The original post said that the 400k that the person sunk into his new home was all from the sale of his previous home.

Absolutely agreed that if there is no rainy day money then no this shouldn’t be done. Again, I made that assumption based on what was written in the post. Conversely the guy could/should put the 2k that he is saving each month, away or invest it conservatively as well.

SD Realtor

[an]

SD R, I agree that if this guy have a lot of rainy day money, and are a conservative guy, then definitely, go for it. It’s just not me, I take a little more risks than that.

[an]

SD R, I agree that if this guy have a lot of rainy day money, and are a conservative guy, then definitely, go for it. It’s just not me, I take a little more risks than that.

[bob2007]

I thought about this long and hard when buying earlier this year. I could go either way, but chose the 20% down and large cash reserves to put in diverse investments.

I had no mort. before, so it was hard to fight the urge to put down a lot of money. It turns out my particular investments have always been over 10%. My jumbo was no points, no fees, 6.25%. This way I have years worth of payments if something bad should happen. The part of the money in Inet bank accounts provide 5.1% interest for high balances. I think AN’s numbers are in the ballpark.

Risk is everywhere. Who is to say the buyer in this post won’t do better in the long run than me?

PS. I have reasons for buying, don’t need to rehash.

[bob2007]

I thought about this long and hard when buying earlier this year. I could go either way, but chose the 20% down and large cash reserves to put in diverse investments.

I had no mort. before, so it was hard to fight the urge to put down a lot of money. It turns out my particular investments have always been over 10%. My jumbo was no points, no fees, 6.25%. This way I have years worth of payments if something bad should happen. The part of the money in Inet bank accounts provide 5.1% interest for high balances. I think AN’s numbers are in the ballpark.

Risk is everywhere. Who is to say the buyer in this post won’t do better in the long run than me?

PS. I have reasons for buying, don’t need to rehash.

[Chris Scoreboard Johnston]

Chris Johnston

I agree that he did a wise thing in putting alot down. High leverage is what got people in a bad spot to begin with. Why are people always standing in judgement of others on so many things?

[Author]

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