Should I buy a house, and if so how much should I spend?

[Dinner]

Go for a fixed if you can get one.

this is terrible advice

Unless I'm missing something else, the most important choice I can see making is an ARM vs a 30y fixed. And given what I've told you guys thus far, one of those two things would cost me hundreds of thousands of dollars vs the other. This is hundreds of times more important than what mortgage broker I choose.

Jesus Christ, man, the broker will go over this with you as you're paying him for his professional advise. He'll explain options in detail with you, tell you places you can go to learn a bit more for yourself, and help you fill out the applications as well as little tricks you can do to get better rates.

[notyoueither]

I'm glad you can admit that the situation is exactly as I said. You want the first to lead to the second (all while showing off your riches of course)

Geez, you're being a hardass. Discouraging high net worth individuals from posting. Are you the anti-Apple? That's a good busineess model... somewhere.

Or is it just KH? That I could see. But then his 'look at me' threads could be a legit attempt to connect with high income Polyzens for perspective. Well, except the bar tab ones...

[pchang]

Go for a fixed if you can get one.



Jesus Christ, man, the broker will go over this with you as you're paying him for his professional advise. He'll explain options in detail with you, tell you places you can go to learn a bit more for yourself, and help you fill out the applications as well as little tricks you can do to get better rates.

Actually, KH should go for 15 year fixed if he really feels comfortable about sticking to his plan. Otherwise, a five year ARM will give him the lowest rate if he is sure he will be out of the place in 5 yrs. 7 yr ARMs are sort of the compromise, but not as many places offer them. Who does your banking? They should offer a good rate to keep your business. If you offer the whole deal of your banking business (wealth management), they should bend over to give you a better rate.

[pchang]

Btw - mortgage interest deduction is capped at a balance of $1million and AMT reduces it too.

[KrazyHorse]

How much does amt reduce it? My understanding is that home acquisition debt up to a mill is still deductible.

Also, I don't know why you think 15 fixed would be most appropriate? There's no good reason to pay off principal on a mortgage that I can see.

Personally I would go for a 5/1 with a 30yr repayment schedule and no prepayment penalty - most likely to not **** me if I move early, holds cash flows steady enough at first (until I rebuild my non-401k savings from down payment). Plus it's a good way to synthetically get some rates exposure (my portfolio is currently equity heavy) - call it 5-7 years of duration on the loan principal.

[Aeson]

Geez, you're being a hardass. Discouraging high net worth individuals from posting. Are you the anti-Apple? That's a good busineess model... somewhere.

The majority of server resources are expended here, but on-topic generates all the revenue. However I like the OT and said I'd keep it open so that's not really an option to close it. We in the OT are all subsidized by random Googlers who actually play Civ. :busineesmodel:

As for discouraging KH from posting, I think even if I wanted to my posting here could only have the opposite effect. He can't ever leave because then I could freely claim to have driven him away and won Poly.

[Sava]

sounds like socialism

[Aeson]

It's more like Globalization. On-topic is the backwards nations we extract resources from and siphon off the wealth created by a poorly compensated workforce so we can live the high-life in the OT

[OneFootInTheGrave]

[Ben Kenobi]

Personally I would go for a 5/1 with a 30yr repayment schedule and no prepayment penalty - most likely to not **** me if I move early, holds cash flows steady enough at first (until I rebuild my non-401k savings from down payment). Plus it's a good way to synthetically get some rates exposure (my portfolio is currently equity heavy) - call it 5-7 years of duration on the loan principal.

30 year with no prepayment penalty makes sense in FL. You don't want to end up with a mortgage down there and having to unload the mortgage in CT when you're ready to retire. 15 gives you more moving flexibility over the 30 year (less principal = more flexibility). It's a trade off for short term increased payments, for more flexibility middle term if you do have to move. I'm with Pchang here. I don't see what the 30 year offers you in CT. It's meant for principal residence and folks who can't afford to buy the house outright. I'm seeing a difference of about a percent in your favor for the 15 vs the 30. If you can afford the 15, you should do that.

I'm against Pchang's 5 year ARM, as I think that rates will increase in that period,and the difference between the 15 and the 5 isn't much. Of course, YMMV.

[100% Wolf]

30 year with no prepayment penalty makes sense in FL. You don't want to end up with a mortgage down there and having to unload the mortgage in CT when you're ready to retire. 15 gives you more moving flexibility over the 30 year (less principal = more flexibility). It's a trade off for short term increased payments, for more flexibility middle term if you do have to move. I'm with Pchang here. I don't see what the 30 year offers you in CT. It's meant for principal residence and folks who can't afford to buy the house outright. I'm seeing a difference of about a percent in your favor for the 15 vs the 30. If you can afford the 15, you should do that.

I'm against Pchang's 5 year ARM, as I think that rates will increase in that period,and the difference between the 15 and the 5 isn't much. Of course, YMMV.

WTF am I reading.

[pchang]

How much does amt reduce it? My understanding is that home acquisition debt up to a mill is still deductible.

Also, I don't know why you think 15 fixed would be most appropriate? There's no good reason to pay off principal on a mortgage that I can see.

Personally I would go for a 5/1 with a 30yr repayment schedule and no prepayment penalty - most likely to not **** me if I move early, holds cash flows steady enough at first (until I rebuild my non-401k savings from down payment). Plus it's a good way to synthetically get some rates exposure (my portfolio is currently equity heavy) - call it 5-7 years of duration on the loan principal.

Technically, AMT does not reduce the mortgage allowance. However, it does cap the total amount of itemized deductions. AMT always hits me in a pretty big way.

15 year fixed reduces your total cost by a fair amount. Based on your other numbers, I thought liquidity was not necessary for you. Relative to other uses for your money, paying down mortgage has much lower risk if you are really going to stay put until you are 50. If you think you can do better with your outside investments, then 5 yr ARM (30 yr term) is the way to go.

[Dauphin]

I complete the sale of the first home I ever bought, on Monday. It is going to be a moving experience.

[pchang]

I complete the sale of the first home I ever bought, on Monday. It is going to be a moving experience.

You live in Australia? That market has really shot up in the last few years.

[PLATO]

ARM is the only real choice for the loan size you are looking at KH. The rate differentials between ARMs and Fixed on Jumbo loans are ridiculous. I am sure you probably know the lenders in that area, but there used to be a bank called Astoria Federal that I did some business with that had some pretty competitive ARM rates 5 years ago. ING is sometimes competitive but they can be a bit volitile in their daily pricing. Most of the loans I have dealt with were not Jumbo loans, so my advice is limited on where to go.

Do the calculation on discount fees considering only the fixed period of the loan as you will likely refinance to another ARM when it is ready to adjust. Not sure if you would benefit from this as I don't really follow the Jumbo market these days. For 15 years in the property you will likely refinance twice. So when looking at the long term figure in the additional closing costs.

As far as how much to spend, as long as the cash flow isn't an issue, you need to consider marketing time. Marketing times can rise dramatically as you go up in price in the range you are looking at. You might want to consider that as a long term factor in both the loan you choose and the price range you choose.

There...that's my two cents worth...and I probably overcharged at that.