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Mortgage Advice

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Wife and I make 200k (gross) have an option to buy a 850k place with a 25yr amort or a 450k place with a 13 year amort. In both cases will only put down 5% - thought and rational appreciated
>>
>Wife
theres your first mistake
>200k gross
>5% down
keep renting until you can put at least 20%
>>
rational? figure our money is better served in the market than as a down
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>>965293
I dont fully agree with the wife comment. But I do agree that OP should put 20% down to avoid PMI. With that salary you should really be able to save more man.
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>>965295
PMI
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what about it? If we figure we can make more than the cost in the same amount of time in the market are we not better off putting the least amount as a dp?
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>>965282
>wife
>5% down
The absolute madman
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>>965297
you can refinance after you get above the 20% threshold and get rid of the PMI (assuming FHA, but those prices are above FHA maximums I believe).

Anyways, with a traditional loan, the PMI would go away naturally once there is 20% equity in the property. No need to worry about saving up 20% beforehand to avoid it.
>>
not worried about refi at all - no need with the places we've picked out. It's really about turnkey and everything we want (850k) or get into a place we're somewhat happy with but will have paid off in no time (short amort) - trust me wife is the least of the issues.
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>>965314

No.

PMI doesn't just fade to black. One of the requirements to remove it is to get an appraisal to demonstrate that your loan balance isn't more than 80 percent of the home's current value.

Home prices are at or near record highs in many markets.

What if the markets tank locking in your shitty PMI for years to come?

Is this speculation? Yes, but you don't have to speculate with 200k gross income. Save up the cash and avoid all of this potential nonsense with a 20% down payment.

Putting that 20% downpayment into the house also guarantees that you won't ever have to pay interest on those dollars.

Nobody knows the future of the stock markets and you are speculating that the market will provide better returns than your mortgage loan.

Sounds like what too many people I know today are doing. And about the masses...

Don't be a fool and potentially over-leverage yourself.
>>
>>965314
>everything we want

Over time small fish pay
>>
>>965332
Op for gods sake listen to this anon.
You'll be so highly geared that one medical incident your health insurance won't cover and your LVR will push you towards foreclosure.
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>>965302
First I'm gonna assume that since you're considering two houses, one nearly twice as expensive as the other, that you could live comfortably in the cheaper one. Here I see no reason to spend another 500k+ once it's all paid off.

That being said, PMI is probably gonna run you 3-4k/year for the first few years on a 427k mortgage with 23k down

If you're certain that you can take the 67k difference and generate a high enough return in the market to offset the PMI plus the extra interest AND justify the risk and extra shit that comes with a 5% dp then by all means do it

But when you're talking 200k gross between the two of you I can't see why that 67k would be a huge deal, just put the 20% down, you'll have lower payments and alleviate some risk. THEN use the money left over from the lower payments and invest that. In this case I wouldn't rely on investments, that's just putting risk on top of risk.

If you're dead set on making the lowest possible dp then consider an 80-10-10, but even then you have the issue of a variable rate on 10% of it.

BUT if you're in a situation where you can only afford to put less than 20% down on a single mortgage then you're just doing something wrong and this is the least of your problems.

TL;DR Just don't
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should i have mentioned we live in Canada? and not worried about health insurance at all!
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>>965282
Mortgage banker here... I am calling bullshit on 5% down on a 850 purchase. Why would you come on here and lie?
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I think there are more than two houses in Canada. Try finding something in the middle anon.
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>>965384
Canadian here, government imposed 5% down payment program, we have to allow it. That being said banks can do whatever interest rates on it they want.
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with 88 on this one...5% is allowed up to 1,000,000
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>>965391

>>965381
I'm just going to read through the lines of your "everything we want" pitch:

-You are both extremely poor savers and cannot save up the 20% downpayment with your 200k gross income. This is likely due to poor/impulsive spending habits. In this thread, you just don't want to feel like an idiot for thinking about putting down 5% on a house. Too bad. You are, indeed, an idiot if you do this.
-You are not looking for advice in this thread and you have already made up your mind.

Nobody is on your side here.

Go make one's bed and sleep in it.
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>>965381
Lets talk building structure problems then.

One heavy blizzard your roof falls in onthe tenanted $850,000 property.
Its fine you had insurance for home and contents so the renters are getting put up in a hotel by your insurance as repairs are made.
Without rental cashflow could you afford two months repayments to make whilst the house generates no income?
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kind of the post i'm looking to understand / rationalize. What risk do we have with a low dp? Our incomes are solid, ok not guaranteed, but what is in life! We can afford a bigger place why not? the cash flow is NOT a problem, i just feel our money is better served in the market than on a dp.....roof caves in we have the savings to fix it...no issue at all. This is solely a dp question!
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and this is primary residence not a rental....
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>>965391
At about 5 per thousand on an 800k loan you would be over 4k per month before taxes and insurance on a 30 year... Add in another 1500 if taxes are high in Canada and you're between 5 and 6 k a month. Making 200k per year pretax means you probably see maybe 120k (no knowledge of Canadian tax.). So more than half of your income is going to your house, and if one of you runs into a hardship you're fucked
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>>965405
Just because you type not in capital letters doesn't mean the lender will agree.

Lenders work on budgets and contingencies. And what you've presented so far lacks forward thinking in either respect.

Mate I don't give a fuck if you get approved or not, but you have to convince a lender to approve you for a $845,000 loan. Now unless you're doing a grow house there is clear risk there in your incomes.
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>>965282

Why the $850k house? You have no kids right?

seems like a waste for sure. You and your wife should be very comfortable in something $400 - $500. Plus homes in that range keep a good resale value even in a downturn.

Just think of all the stuff you could do with that extra money...
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>>965411
$807,500 loan.
My mistake

>>965406
Thats even worse as you can't claim expenses as an investment
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>>965405
>We can afford a bigger place
Then you should have no problem with 20%

with a lower dp you run the risk of tying up too much of your paycheck in monthly payments to the point where an unexpected expense could fuck you over
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>>965405
Listen mate, I'm going to give you some real solid advice ok.

Whoever it is that is driving you to impress them, whoever's approval you feel you need- ignore it.
Whoever this person is, is toxic and making you think irrationally.

You've be better off getting 3 x $200,000 and generating wealth over the long term and providing for your wife. Hell you could cheat tax and do up on of the cheaper homes to a cozy cottage for your wife and you and run off the expenses against the other 2 (slightly illegal)

Sometimes people cajoole others into taking on unsustainable debt as a means of control over them. At nearly a million dollars with of leverage you really have to ask how long that will take to pay off on around a net $50k a year salary and asking if your youth and energy is better spent.

You can think I'm a cunt all you want, but that is real advice.
>>
So what do you do when your wife stops working and your income gets cut in half?

Then what do you do when she starts fucking Jamal in your 850k house and makes you live in a 1 bed 0 bath chuck shed?
Thread posts: 29
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