Author Topic: logic check  (Read 257 times)

ePalmtrees

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logic check
« on: March 06, 2019, 01:04:42 PM »
I put a larger than necessary deposit down on a house. I have been thinking that it was "earning" the house appreciation rate. Now I'm thinking that doesn't make sense because the house appreciates the same, and I get the same profit at the time of the sale, no matter how much money is in the house or was put down on the house.

So instead of earning a theoretical 5% appreciation rate, I'm just losing a 7% theoretical stock market rate on the same amount of money.

Right?

Thank you!

Finallyunderstand

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Re: logic check
« Reply #1 on: March 06, 2019, 02:11:02 PM »
not quite.  If your mortgage is 4.25% and market returns are 7% then you're "losing 2.75%.  That's the simplest of comparison.  Many other factors at play.

v8rx7guy

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Re: logic check
« Reply #2 on: March 06, 2019, 02:36:35 PM »
What percent did you put down?  Putting down 20% has a decent advantage in that it prevents you from having to pay PMI, there is a small advantage to that.  Additionally, putting in a larger down payment should reduce your monthly mortgage payment both of these options free up more money to invest into the market.  But you are logically correct, the extra down you put is not going to appreciate.