Mortgage Advice

[xRanger]

My wife and I, "wife meening lets buy more than we can financially afford" baught a house an a 3yr ARM, in 2004. IF i remember without looking, we locked in a 5. something% interest rate with a gaurantee of no more than a +1% interest rate increase yearly. Luckily, we did not increase the first or second year, and we sold 2.5 yrs into the mortage. My opininon, we got really lucky. Sold the house for a good profit, and luckily7,. we did not get hit for taxes since we lived in it for 2.5 yrs. ( Apparently, 2 out of 5 yrs living in the residence, means you dont pay taxes on the profit unless you dont make over $500,000.00 on the sale!) "Yeah, I wish!" So it worked out ok, thankfully! Luckily we are going to build next time, so it will be a little bit of a different story, but, we will be going fixed/15 or 30 for sure.

Bill

 

[AVB]

For me, you have it backwards. I wouldn't be looking at 700K houses unless I had the 70K downpayment and my job would pay me enough to cover something that expensive. The 3.5 rule works quite nicely here as you should be making 200K before you start looking at 700K houses. If you can't save up the downpayment on that salary you shouldn't be buying a house.

I would love to see you put 70k down on a 700k house, and still have enough money in your pocket just in case you need to pay the mortgage for a couple of months because work is slow.