Evaluating Down Payment Options for a $2.5M Home Purchase

Discussion
1

I’m planning to purchase a $2.5M home in 1-2 years and am considering different down payment options to maintain liquidity for future investments. The estimated interest rate is around 6.5-7%. Here are my options:

  1. Put $1M down with a 5-year Interest-Only ARM.
  2. Put $1M down with a 30-year Fixed Rate.
  3. Put $500k down with a 5-year Interest-Only ARM.
  4. Put $500k down with a 30-year Fixed Rate.

I’m leaning towards Option 3 to preserve capital liquidity and avoid selling invested capital, while still affording the monthly payments. What might be the risks or factors I’m overlooking in this strategy?

2

Are you sure an ARM is the best choice given your financial goals and the current interest rate environment?

3

Reagan said:
Are you sure an ARM is the best choice given your financial goals and the current interest rate environment?

ARMs could be advantageous if interest rates decrease in the next five years, allowing for a beneficial refinance before the rate adjusts.

4

Make sure your rate is locked in. Rates can be volatile, and what seems like a good deal now might change unexpectedly.

5

The jump from 4.75% to 6.25% is significant. Ensure there’s no error or misunderstanding with your loan terms, and don’t hesitate to negotiate or shop around.

6

Consider discussing this change with your loan officer or seeking a second opinion. If misleading information was provided, you might have grounds for a complaint.

7

This situation sounds like a potential bait and switch tactic. Be cautious and verify all information.

8

If your rate wasn’t locked, unfortunately, the initial rate was not guaranteed. Always confirm rate lock details in writing.