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Raybyrnes
ParticipantJustLurking
“The finance books all agree that you should finance as much as possible, if the rates are reasonable”
There are 2 different points here and I want to be clear where I stand. I am not suggesting somone increase the amount of home they can buy by seeking to take on a larger amount of leverage. What I am suggesting is that if I can afford 1 Million in property rather than putting 350K as a down payment I am only going to put the 200K down.
Why? While I might have a slighly higher payment I have a substantially higher amount of cash. This cash provides far more safety in an unforseen circumstance that my slightly higher payment.
Therefore I would argue that your perception of having less risk with the lower payment is an incorrect assesment.
The reality is that all people have reoccurring expenses. this comes in the form of utilities, food, taxes etc. Cash on hand allows me to make these payments in a worst case scenario while at the saem time providing me with liquidity in the event that the deal of the century presents itself.
I will once again go back to my Katrina example. Who was better off after their homes had been destroyed. The guy with the lower payment and no home and little cash or the guy with the 150K because he elected to put the 20% down instead of the 35%. Seems to me that the guy who put 35% might have thought he was taking less risk when in fact he was taking on more risk. Your thoughts
ParticipantJustLurking
“The finance books all agree that you should finance as much as possible, if the rates are reasonable”
There are 2 different points here and I want to be clear where I stand. I am not suggesting somone increase the amount of home they can buy by seeking to take on a larger amount of leverage. What I am suggesting is that if I can afford 1 Million in property rather than putting 350K as a down payment I am only going to put the 200K down.
Why? While I might have a slighly higher payment I have a substantially higher amount of cash. This cash provides far more safety in an unforseen circumstance that my slightly higher payment.
Therefore I would argue that your perception of having less risk with the lower payment is an incorrect assesment.
The reality is that all people have reoccurring expenses. this comes in the form of utilities, food, taxes etc. Cash on hand allows me to make these payments in a worst case scenario while at the saem time providing me with liquidity in the event that the deal of the century presents itself.
I will once again go back to my Katrina example. Who was better off after their homes had been destroyed. The guy with the lower payment and no home and little cash or the guy with the 150K because he elected to put the 20% down instead of the 35%. Seems to me that the guy who put 35% might have thought he was taking less risk when in fact he was taking on more risk. Your thoughts
ParticipantJustLurking
“The finance books all agree that you should finance as much as possible, if the rates are reasonable”
There are 2 different points here and I want to be clear where I stand. I am not suggesting somone increase the amount of home they can buy by seeking to take on a larger amount of leverage. What I am suggesting is that if I can afford 1 Million in property rather than putting 350K as a down payment I am only going to put the 200K down.
Why? While I might have a slighly higher payment I have a substantially higher amount of cash. This cash provides far more safety in an unforseen circumstance that my slightly higher payment.
Therefore I would argue that your perception of having less risk with the lower payment is an incorrect assesment.
The reality is that all people have reoccurring expenses. this comes in the form of utilities, food, taxes etc. Cash on hand allows me to make these payments in a worst case scenario while at the saem time providing me with liquidity in the event that the deal of the century presents itself.
I will once again go back to my Katrina example. Who was better off after their homes had been destroyed. The guy with the lower payment and no home and little cash or the guy with the 150K because he elected to put the 20% down instead of the 35%. Seems to me that the guy who put 35% might have thought he was taking less risk when in fact he was taking on more risk. Your thoughts
ParticipantJustLurking
“The finance books all agree that you should finance as much as possible, if the rates are reasonable”
There are 2 different points here and I want to be clear where I stand. I am not suggesting somone increase the amount of home they can buy by seeking to take on a larger amount of leverage. What I am suggesting is that if I can afford 1 Million in property rather than putting 350K as a down payment I am only going to put the 200K down.
Why? While I might have a slighly higher payment I have a substantially higher amount of cash. This cash provides far more safety in an unforseen circumstance that my slightly higher payment.
Therefore I would argue that your perception of having less risk with the lower payment is an incorrect assesment.
The reality is that all people have reoccurring expenses. this comes in the form of utilities, food, taxes etc. Cash on hand allows me to make these payments in a worst case scenario while at the saem time providing me with liquidity in the event that the deal of the century presents itself.
I will once again go back to my Katrina example. Who was better off after their homes had been destroyed. The guy with the lower payment and no home and little cash or the guy with the 150K because he elected to put the 20% down instead of the 35%. Seems to me that the guy who put 35% might have thought he was taking less risk when in fact he was taking on more risk. Your thoughts
ParticipantJumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.
Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.
I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.
Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.
ParticipantJumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.
Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.
I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.
Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.
ParticipantJumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.
Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.
I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.
Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.
ParticipantJumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.
Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.
I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.
Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.
ParticipantJumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.
Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.
I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.
Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.
Participantraptorduck
I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.
Participantraptorduck
I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.
Participantraptorduck
I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.
Participantraptorduck
I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.
Participantraptorduck
I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.
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