Town Home Down Payment Question

[Gardener]

Any help/advice would be greatly appreciated.

My question is how much money should I put down and should I sell my taxable investments in VTSAX now or hope that they have continued to rise up until home completion? Next question is should I pay about an additional 1 percentage point above market rate for my mortgage in order to take advance of a NFCU program that allows you unlimited no refi, rate changes, if rates were to go down in the future? **Would need to pay $250 each time I decreased interest rate, and can do it every 6 months if I chose**

I am under contract to purchase a new construction home, estimated date of completion is July 2025. These are town house buildings that are staying on schedule so that estimated date of completion is very likely.

Some hopefully, quick relevant facts.

Town home price is $685K

I want to put down at least 20%, which is $137k.

This leaves a $548k mortgage.

I have ~$180k in a taxable brokerage that was not ear marked for anything in particular.

I have ~$35k in a money market account. I will probably save up another $50-$100k before the settlement date.

I will have a Fed pension of about $50k. I have about $700k in retirement accounts.

Mortgage rates now are in the 6-7.5% range.

I am 41 years old, engaged, and have a child from a previous marriage.

[bloom2708]

I would not pay 1% for unlimited refinances. You can refinance with another company if rates drop enough to warrant a refinance.

What percentage of your gross/net income will your mortgage payment be? With 20% down or with more than 20% down?

What monthly payment are you comfortable with? How does this compare to your previous mortgage payment or rent payment?

Do you have good estimates for insurance and property taxes, HOA, etc?

Put enough down so you the monthly payment isn't a burden. Check your gains/losses in taxable brokerage so you know if there is any tax consequences to selling and putting more down.

Real estate is very local. $685k could be a luxury townhome in one place and a starter/1st home in another place.

Hopefully you get some other nuggets of ideas.

[gotoparks]

If it is a VA loan they have what is called a stream line refinance. My first mortgage was VA and I refinanced twice with minimal out of pocket. If it is a conventional loan, when the rates come down, I would look around and refinance with someone else. I did that a few years ago from NFCU to someone else. Down payment depends a lot on your finances. If 20 percent is comfortable for you then do that. I put down 50% on my current home to make the payments reasonable. You are young so you should have money in the stock market somewhere. Keep investing in the stock market; don't make yourself house-poor.

[barnaclebob]

If you are under contract, you need to have your down payment in a money market account. What happens if the stock market drops 25% before July? What about 50%?

Your time for gain getting is done with that money.

[Gardener]

Thank you for the replies.

My income is $200-$250k depending how hard I push side business.

I think with interest rates as high as they are, I will put down as much as I can, save for maybe $40k in the brokerage.

Va mortgage fees are pretty high but maybe the added benefits are worth it. I had thought that va mortgage only made sense if you were not going to put 20% down?

I guess I’ll go and sell at least a portion of my brokerage now since we have no idea as to what will happen in the short term. Is it just LT capital gains I pay at 15 percent?

[WeakOldGuy]

My income is $200-$250k depending how hard I push side business.

I think with interest rates as high as they are, I will put down as much as I can, save for maybe $40k in the brokerage.

Va mortgage fees are pretty high but maybe the added benefits are worth it. I had thought that va mortgage only made sense if you were not going to put 20% down?

I guess I’ll go and sell at least a portion of my brokerage now since we have no idea as to what will happen in the short term. Is it just LT capital gains I pay at 15 percent?

You will need to pin down what your MAGI is for NIIT. AGI plus non-taxed SS benefits. If it is over $250k for MFJ, then you will be paying an additional 3.8% capitol gains tax. So instead of the 15% on the LTCG, you would be paying 18.5%. So you will want to figure out what the basis is on that taxable account. It should be easy from your brokerage website.

[gotoparks]

I took the VA loan a long time ago. There were fees but I don't remember the details. They might have gone up or down since I did it. I didn't have a down payment so that was my driver. A few years ago, when rates were super low, I did my last refinance unless I buy another house. There was a refinance mega thread that was popular, and I got ideas from that and also found Better.com which I went with for the refinance. When the rates come down there will be more threads on refinancing so if you come back you can get some ideas.