In need of immediate advice

hello friends
Im in need of immediate advice from experts here. Im planning to get a property for arnd 950k and debating how much down i should put as downpayment. bank is WF. Im not able to clearly think thru the scenarios and financial implications of them.
I can do 20% if appraisal comes in close to 950 but if it comes in say arnd 900 then thinking of 10% or 925 then may be 15%.
Other thing is, 10% is still in the form of stock, so thinking should I liquidate the stock and use it as downpayent and reduce the monthly payment or let the stock grow and make a bulk payment later. What factors should i consider if I go with this method?
Is there an option to re-adjust the monthly payment later?
How much reserves do i need to keep?
Also, is it possible to decide the downpayment after the appraisal comes from WF bank in or is it too late in the loan process to decide?
Any advice in general is much appreciated
thanks in advance

I always try to minimize my down payment. I bought a few properties with 10% down 3 and 4 years ago. I had to pay slightly higher interests rate but to me the flexibility and the leverage are totally worth it.

Flexibility is key. If I had money sloshing around that I have no better use for, I can and should pay more principal that month. Flexibility means I will have more money elsewhere, that can be used in times of emergency for example. I am also more diversified in terms of investment. I have extra money to invest in my business, in my stocks portfolio, etc.

That’s also why I always take take longest terms. If they offered 40 year mortgage I will do that too. :slight_smile:

People do need more discipline to pull this off though. The “force” in real estate’s forced savings is very strong. People with weak self discipline should willingly wear that tight straitjacket, the tighter the better. Of course nobody will admit to have weak discipline. Not me of course… :smile:

It depends.

you can change loan terms from what the contract states. However you have to close on times within days of scheduled closing or have an easy seller. We’ve changed terms and lenders during purchase and we were ready to close early.

That said talk to your LO about your various options, how they effect closing (underwriting) and how the apply to your financial situation. Rates can change based on down payment.

Talk to you RE agent about changes affecting the deal.

Listen and ask questions. If they are negative take it seriously.

Getting through escrow is a part time job. Underwriters work first in first out. If they request something drop everything else and get it to them as once they receive the info the file goes to the bottom of the pile. Take every request from escrow, title and lender seriously and make it the top priority of your life.

Being under contract means nothing if you can’t close.

This is a situation where an experienced LO and a savvy buyers agent will make the difference.

I like flexibility. Some call it an inability to commit. I like interest only ARMs and pay them as if they were 15 or 20 year amortized. I can cut back if needed. But this is where discipline to is needed. In this current world of consumerism discipline can be difficult. I see it in my kids and the younger relatives. One kid saves and another can’t look past today about money.

I discovered decades ago that discipline in my finances were to automate as much as possible. Currently hubbys Diect deposit goes into three accounts. One is bill paying, one is savings (no atm or visa check card) and the third is household. Out of household money is transferred to personal accounts. Out of bill paying money is transferred to various accounts like property taxes, IRA and slush fund. Groceries and other misc stuff is paid through the household account. It has a visa check card. Business finances are separate and we budget on hubbys income. Knowing other funds are available adds confidence. Sometimes we actually buy stuff like a car. Hubby was in a horrid accident totallling his beloved 13 year old car. I can’t imagine loving a car like that. It’s like the insurance commercial up to the happy dance. I’m told that I’m not a guy so I can’t understand it.

I use quicken and have paid bills through it for decades. At a glance I know the financial situation at any given time. Because of my spending er savings problem I have a slush fund which is really a savings account that is used for the unexpected. Recently my husband was injured and unable to work for nearly two months which was unexpected. We got to learn how to navigate the disability system, we cut back spending, cut back mortgage payments and the slush fund was used until disability payments arrived. After two pay checks things will revert back.

Another concept I’ve taken to heart is “pay yourself first”. That means when a paycheck comes, first thing you do is save a portion of it, no question asked. Having it automated is a fantastic idea. You don’t even get to see the money, thus no psychological pain of “losing” your play money.

Pay Yourself First.

The automatic transfers are perfect for “pay yourself first.” One of our savings accounts is auto deposited from the paycheck. Others are through the bank on payday.

The savings account directly deposited from the paycheck doesn’t have an ATM card and the only access to funds is by transfer or going to a branch. It is also at a separate institution from our regular accounts so its easy to ignore. I “hide” it in Quicken so I can forget it. Twice a year my calendar has an entry “move money to brokerage account” along with “check investments.”

I’m a guy but don’t understand it at all. I’ve a friend who spent every cents on his sports car, leading to a divorce. To me, car is just for transport. Buy the most reliable at lowest cost, period.

Is this a primary residence or investment property buy? I thought in general investment property purchases require at least 25% down? I realize there may be a relaxing of that rule now but when I was looking a year or two back that’s what my mortgage broker said I had to put down.

It was a Civic Hybrid 5 speed that had at least 150k miles on it. It’s not like it was a Porsche or something spectacular. I would love a Porsche but I’d rather travel and do other things that owning a Porsche would prevent. I’m too practical. My cousin bought a 911 Porsche many moons ago and I loved driving it. Unfortunately in order to afford the car he had to live at home. That got old quickly and so did the car.

I would go with 20% down, as that will be lowest cost (rate, no PMI).

On the contract, not sure if you are already in contract. The downpayment goes into the contract, and sellers do care about this downpayment number. Because low downpayment can be risk to failing to get loan, especially when appraisal comes in low. So if there are multiple offers, and everything else being equal, seller likely to accept higher downpayment offer.

Obviously if your downpayment is in stock, then bank will not take your stock, so you have to cash out.

There is no option to re-adjust monthly payment, unless you refinance.

Bank will require 6 month reserve. What you decide to keep over that is up to you. No one can advise you here. But this is not difficult, as you can use 401k and investment account.

I think you are tying lots of different things together.

  • there is no reason for downpayment to be based on appraisal (other than avoiding PMI but that’s not your angle here).
  • it’s unwise to link future growth in stock with house payment. If you assume stock can grow more than the interest rate etc., why not put all your money into stock and defer buying the house?

You are buying a house because you need one. Optimize this single transaction without long term global optimization.

I’d pay 20% to avoid PMI liquidating stocks if needed.