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I just sold my SFH in Vienna and made a nice $250K profit on it. I am considering using that money to buy a SFH around $750K in Oakton. Given that the mortgage rates are increasing, I wanted to keep the loan amount at $417K so as not to trigger the higher jumbo rate. Also, I do not want to take a second trust since I do not want to increase my monthly mortgage payment.
Which means, for a $750K home, I will be borrowing mortgage amount of $417K and putting down $333K of my own money. The split-up of $333K will be $250K from the profit of my current house and $83K from my savings. Since I am not dipping into my emergency funds, and my 401K and 529 plans are being regularly and sufficiently funded, is my strategy the correct one?
I know that I would be making a 44% down payment as opposed to the conventional 20%. That is, instead of investing my money I am plonking it down on a house. But my reasoning was that the mortgage rates are only headed higher (current rate: 6.25% on a 30-yr fixed), so what's the point in keeping the savings in a bank account or CDs (which have traditionally returned interest below inflation) or investing them in equities (which have traditionally returned 7-8% before tax). Might as well use it to reduce the monthly mortgage payment.
I just got it. Single Family House. We call 'em SFR's here - Single family residences---or is it SFD's--single family dwellings--damm, now I'm really confused. Sorry.
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