s/o--so how did you afford a 2 million dollar home?

[Anonymous]

Anonymous wrote:22:40 - IF you have a financial advisor, you need to fire him yesterday. Of all the people I know in $2-$3m houses, NONE of them have mortgages. They have MANY different investments, their house is just one of them. Their money is tied up many different ways, some I have never heard of (all legal, as they are audited just like the rest of us). Its not like they can hand out money like candy, their money is tied up, committed and invested very prudently. You need to look into this for yourself.

You are definitely well off and have friends that are wealthy and probably have been there years ago and perhaps bought their homes years ago. In the not so distant past 1 mil used to buy you a high end home that only 2 mil will buy you now. 2 mil now is the new 1 mil. People moving into 1 mil+ homes are upper middle class professionals, most of whom take mortgages and would not be able to buy their homes out right. It is just the reality of RE prices in this place, starter homes in mediocre locations now cost 500K, and entry level price in many neighborhoods, which is not a tear down, now is 1 mil, which makes 2 mil+ homes not that unusual and not only reserved for the well off, like it used to be a decade or even less ago. You are right, that at some price range, homes are purchased mainly by people who truly can afford them, not many of those who overextend themselves. But this price range is moving rapidly upwards, because people who want nice quality homes realize they cannot get them for under 2 mil and are willing to leverage more and make more sacrifices to get into the house they want. I live in the area where these 2 mil homes are routinely built on 800K tear down lots and they sell. It's becoming very common in many inner burbs of DC. Chances are someone with the stable HHI of 500k and enough savings for downpayment and a rainy day would be willing to do a 2 mil dollar home or close to it, just to get themselves settled into a home they want. Those with lower 6 figure incomes are buying 1 mil+ homes, they are forced to either take on a larger mortgage to get into the area they want, or have to move further out. I remember the times when you would be considered rich if you lived in a 1 mil home, now, it's just an OK acceptable middle class looking home in a top desirable area or a nice new construction home far out.

[Anonymous]

Anonymous wrote:22:40 - IF you have a financial advisor, you need to fire him yesterday. Of all the people I know in $2-$3m houses, NONE of them have mortgages. They have MANY different investments, their house is just one of them. Their money is tied up many different ways, some I have never heard of (all legal, as they are audited just like the rest of us). Its not like they can hand out money like candy, their money is tied up, committed and invested very prudently. You need to look into this for yourself.

I'm not sure I understand your post. We have a 1.2k house, not a $2-3k house. Frankly, we don't have enough money for MANY investments. We make about $290,000 and don't have much left over after all our expenses/bills. If someone doesn't have a mortgage how do they purchase a house? Also, the mortgage interest deduction is very beneficial, as are low rates.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are posters here suggesting that people actually mortgage over $1M? There's no circumstances that we'd do that (and we've bought homes while we were struggling financially and while we'd qualify for a $3M mortgage). And I would be shocked if many of the many people in the same financial situation as us would mortgage as much either.

Yes, we bought a 1.27 mil house and the mortgage was 1 mil. We originally had an interest only ARM so we could make the payments. This was pre 2008 and we assumed the house would appreciate a lot like our previous house did. We have since refinanced and got rid of the arm and the interest only loan. Our payment is still about $7000. Per month.

And how does that make you feel?

I'm thrilled we have a nice (but not huge or over the top) house in a great, close in neighborhood with good neighbors and a good school nearby. I wish we had a lower mortgage but to me it's worth the sacrifice to live in the neighborhood I want to be in.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are posters here suggesting that people actually mortgage over $1M? There's no circumstances that we'd do that (and we've bought homes while we were struggling financially and while we'd qualify for a $3M mortgage). And I would be shocked if many of the many people in the same financial situation as us would mortgage as much either.

Yes, we bought a 1.27 mil house and the mortgage was 1 mil. We originally had an interest only ARM so we could make the payments. This was pre 2008 and we assumed the house would appreciate a lot like our previous house did. We have since refinanced and got rid of the arm and the interest only loan. Our payment is still about $7000. Per month.

And how does that make you feel?

I'm thrilled we have a nice (but not huge or over the top) house in a great, close in neighborhood with good neighbors and a good school nearby. I wish we had a lower mortgage but to me it's worth the sacrifice to live in the neighborhood I want to be in.

Fuck! A 1 million mortgage.

No arm. 30-year fixed. $700k mortgage and we make $475k/yr. Same type home close-in. plus-first home worth $775k-$300k left but we rent it for profit.

No other debt. We invest heavily. No family help.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are posters here suggesting that people actually mortgage over $1M? There's no circumstances that we'd do that (and we've bought homes while we were struggling financially and while we'd qualify for a $3M mortgage). And I would be shocked if many of the many people in the same financial situation as us would mortgage as much either.

Yes, we bought a 1.27 mil house and the mortgage was 1 mil. We originally had an interest only ARM so we could make the payments. This was pre 2008 and we assumed the house would appreciate a lot like our previous house did. We have since refinanced and got rid of the arm and the interest only loan. Our payment is still about $7000. Per month.

And how does that make you feel?

I'm thrilled we have a nice (but not huge or over the top) house in a great, close in neighborhood with good neighbors and a good school nearby. I wish we had a lower mortgage but to me it's worth the sacrifice to live in the neighborhood I want to be in.

Fuck! A 1 million mortgage.

No arm. 30-year fixed. $700k mortgage and we make $475k/yr. Same type home close-in. plus-first home worth $775k-$300k left but we rent it for profit.

No other debt. We invest heavily. No family help.

First home $775k. Second home bought at $1.05mill (3 years later now est. $1.25 mill). Our 3 mill home is split btwn 2

[Anonymous]

Anonymous wrote:19:28 - this. The people I know in $2m houses do NOT have payments and drive old cars that are paid for. They certainly don't "lease" anything!

The people you know in 2k houses don't have mortgages? How did they purchase their house? Who would pay cash, especially with the mortgage interest deduction?

[Anonymous]

...Our main objective is cash flow, not net worth.

!?!?!?
1) a household isn't like a business
2) CF is a measure if liquidity, you can be upside down and bankrupt but still have positive cash flows
3) a blip in you CF and you're in the street - whereas I'd you accumulate NW, a blip in CF can be carried by drawing from NW
4!)

Statements like this just remind me of how much utter BSing goes on here... If it wasn't so addictive reading this junk...

[Anonymous]

Anonymous wrote:22:40 - IF you have a financial advisor, you need to fire him yesterday. Of all the people I know in $2-$3m houses, NONE of them have mortgages. They have MANY different investments, their house is just one of them. Their money is tied up many different ways, some I have never heard of (all legal, as they are audited just like the rest of us). Its not like they can hand out money like candy, their money is tied up, committed and invested very prudently. You need to look into this for yourself.

If they draw a salary an dont have a mortgage they're not very financially savy...heck, even if their income is 100% capital gains, using a mortgage at the current rates is a no brainier....not sure I buy the whole 'no mortgage' stuff... Most cash buyers are not buying as individuals but rather corporations; PE, builders, othr investors

[Anonymous]

Anonymous wrote:

Anonymous wrote:22:40 - IF you have a financial advisor, you need to fire him yesterday. Of all the people I know in $2-$3m houses, NONE of them have mortgages. They have MANY different investments, their house is just one of them. Their money is tied up many different ways, some I have never heard of (all legal, as they are audited just like the rest of us). Its not like they can hand out money like candy, their money is tied up, committed and invested very prudently. You need to look into this for yourself.

If they draw a salary an dont have a mortgage they're not very financially savy...heck, even if their income is 100% capital gains, using a mortgage at the current rates is a no brainier....not sure I buy the whole 'no mortgage' stuff... Most cash buyers are not buying as individuals but rather corporations; PE, builders, othr investors

+1

[Anonymous]

Anonymous wrote:Are posters here suggesting that people actually mortgage over $1M? There's circumstances that we'd do that (and we've bought homes while we were struggling financially and while we'd qualify for a $3M mortgage). And I would be shocked if many of the many people in the same financial situation as us would mortgage as much either.

Absolutely! DH & I both in finance. Just refinanced our principle residence to get the mtg up to $2m. At 3.85% for 30 yr fixed, we would be silly not to. If we can't get a return on our cash above that rate, then we've chosen the wrong careers. Add to that the mortgage interest deduction on $1m of mtg each (we file separately), it's essentially free money to get a nice yield on.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Are posters here suggesting that people actually mortgage over $1M? There's circumstances that we'd do that (and we've bought homes while we were struggling financially and while we'd qualify for a $3M mortgage). And I would be shocked if many of the many people in the same financial situation as us would mortgage as much either.

Absolutely! DH & I both in finance. Just refinanced our principle residence to get the mtg up to $2m. At 3.85% for 30 yr fixed, we would be silly not to. If we can't get a return on our cash above that rate, then we've chosen the wrong careers. Add to that the mortgage interest deduction on $1m of mtg each (we file separately), it's essentially free money to get a nice yield on.

Just curious what do your payments look like before and after taking the tax benefit into account.

[Anonymous]

WHAT??!! Where are you your information, pp? No one I know has purchased their 2m home under a corporation. Who on earth do you think developers sell to? You make no sense.

To your disbelief, some people do have enough of their own money to pay cash for 2m homes, so they do. No corporation involved. It is best for them. Just because you do not want to accept this, or dont know anyone who has done this, does not mean it doesn't happen all the time.

[Anonymous]

--getting--

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are posters here suggesting that people actually mortgage over $1M? There's no circumstances that we'd do that (and we've bought homes while we were struggling financially and while we'd qualify for a $3M mortgage). And I would be shocked if many of the many people in the same financial situation as us would mortgage as much either.

Yes, we bought a 1.27 mil house and the mortgage was 1 mil. We originally had an interest only ARM so we could make the payments. This was pre 2008 and we assumed the house would appreciate a lot like our previous house did. We have since refinanced and got rid of the arm and the interest only loan. Our payment is still about $7000. Per month.

And how does that make you feel?

yeah, we do that. It sucks.

[Anonymous]

Anonymous wrote:I wasn't willing to buy a roughly $2M home until we had a net worth over $5 million, accumulated through years of luck, hard work, saving and RE appreciation on our prior residence. We stlll carry a mortgage of less than $500K, but could pay it off in a heartbeat if we wanted.

I don't that's so unusual in this area - plenty of millionaires next door, and most of them live quietly in the suburbs.

How'd you do it???!!