Reply to What HHI to feel comfortable with a family in a close-in city like Bethesda/Arlington/McLean?

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Reply to "What HHI to feel comfortable with a family in a close-in city like Bethesda/Arlington/McLean?"

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[quote=Anonymous]Depends how much you put down. In Potomac and Bethesda a realtor said average downpayment is 40 percent. Makes sense who can afford the mortgage otherwise.

I work at a bank and we have a few Piggyback customers lately. The do a 30 years fixed mortgage combined with an adjustable ARM at same time. Theory is they are dual income they aggressively pay off ARM prior to adjustment then wife when kids come if wants to be SAHM or one loses job they are comfortable as only the smaller 30 year fixed is left.

For instance buy a 1.5 million dollars home. Get a 30 year mortgage of 800K, get a ARM of 400K and put down 300K. Then couple starts with low interest rate 10/1 year Teaser ARM starts prepaying that aggressively while dual income. By year 10 ARM done, by then second or third kid on way, working may not make sense for Mom and she goes part time or SAHM. The neighbors all wonder how she can afford it, but reality they just worked their butts off. Or could be husband loses job and he could be stay at home. Or both lose jobs down the road in a recession The first few years are risky. But taking a large 30 years mortgage is also very risky if you lose your job as it is high all 30 years.

It is no longer 2000 or 2018 where home prices only go up and mortgage rates only go down. We could get more mortgage rates up and home prices up.  [/quote]

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