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Wells Fargo list today's 30-Year Fixed-Rate Jumbo rate at 3.5%: https://www.wellsfargo.com/mortgage/rates/ https://www.wellsfargo.com/mortgage/rates/ For simpl
by CptJamesCook 10y ago
Wells Fargo list today's 30-Year Fixed-Rate Jumbo rate at 3.5%: https://www.wellsfargo.com/mortgage/rates/ https://www.wellsfargo.com/mortgage/rates/
For simplicity, let's say you put 200k down on this 1.2 mil home. Your mortgage payment on a $1 million loan would be a $4,490/month, or around $50,000 per year. $30,000 of that is tax deductible.
A general rule of thumb is that you shouldn't spend more than roughly thirty percent of your income on rent, so I think any person or family making over 150k/year could feasibly think about a purchase like this.
The major caveat is that $200k in savings is hard to come by.
- api 10y agoIf interest rates rise all these buyers are fucked. Demand at those prices will crash.
- CptJamesCook 10y agoPrices won't crash as long as the Bay Area fails to build housing but keeps creating 120,000 jobs/year.
- matt_wulfeck 10y agoThat happens approximately every 8 years.
- nugget 10y agoYou'd also have ~ $13,200/year in property taxes (also deductible) and should budget another ~ $4,000/year for maintenance and upkeep. Not earth shattering but it does add up. There's some political risk that the Feds will eliminate or at least limit one or both of these deductions. Your basic premise is accurate which is that low rates have enabled people to stretch their incomes to meet high housing prices. Since rates have steadily fallen since the late 70s we've sort of seen this play out before, and we know how it ends: people get into trouble when they lose their jobs and can't sell their house in a down market. If you have 30 years of relatively steady employment, then you are fine.
- eru 10y agoI wonder if one could buy insurance against the deductibles vanishing?