Author Topic: Buying in DC area - or do I need a facepunch?  (Read 1322 times)

morninglightmountain

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Buying in DC area - or do I need a facepunch?
« on: July 24, 2017, 10:25:44 PM »
Based on where my partner and I are with our careers, we think it makes sense to buy rather than rent and to live there for around 5 years.

After talking to TD Bank, I realized that some offer lower interest rates for jumbo loans (wtf?). So essentially, I can have the same monthly expense with a $550k home as with a $500k home (doesn't seem to be any gotchas with closing costs or points that would throw this off).

Jumbo interest rate of 3.75% with points and 3.265% without.  Rate is 4% for confirming.

Am I crazy here? I mean, I realize that prop taxes, insurance, and down payment will be higher with the $550k home, but I'm very tempted by the interest rate.  Anyways, my biggest priority is FIRE and running the numbers through my model it seems like the more expensive house doesn't delay my retirement by any meaningful amount, even taking into account opportunity cost of higher down payment.

waltworks

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Re: Buying in DC area - or do I need a facepunch?
« Reply #1 on: July 25, 2017, 08:34:19 AM »
$50k/.25% is trivial in this context. Make your decision based on buying the right home for you, not on some minor interest rate differential.

-W

morninglightmountain

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Re: Buying in DC area - or do I need a facepunch?
« Reply #2 on: July 25, 2017, 04:40:50 PM »
W,
I hear you, but part of "right for me" is getting a good interest rate and not making a stupid financial decision.

waltworks

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Re: Buying in DC area - or do I need a facepunch?
« Reply #3 on: July 25, 2017, 09:01:52 PM »
Bluntly, if you are buying a half-million dollar piece of real estate, $50k is peanuts. As is a quarter of a percentage point of interest. Forget that stuff and buy (assuming it makes sense to you) whatever house suits you best.

Put another way, $550k vs $500k is not really a big enough difference that it's a good financial decision in one case and a bad one in another. If a $500k house is a good move (no idea if that's the case for you or not) then a $550k house is probably also fine, and vise versa.

Spend your mental energy on something else.

-W

morninglightmountain

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Re: Buying in DC area - or do I need a facepunch?
« Reply #4 on: July 25, 2017, 09:16:37 PM »
Thanks, that perspective was helpful. There are so many unknowns with a purchase like this that I naturally gravitate to something I can understand and somewhat choose. But yeah, doesn't move the needle on the FIRE calcs.

waltworks

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Re: Buying in DC area - or do I need a facepunch?
« Reply #5 on: July 25, 2017, 09:25:53 PM »
BTW, love the Peter F Hamilton username! Shouldn't you just be taking over DC/the earth in it's entirety rather than worrying about buying a house? :)

-W

morninglightmountain

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Re: Buying in DC area - or do I need a facepunch?
« Reply #6 on: July 26, 2017, 08:48:01 AM »
LOL. I'm a bit bottled up in this DF sphere, need to slowly infiltrate :p