Reply to Afford $1.8M on 300K?

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[quote=Anonymous][quote=Anonymous]
If I understand your budget and income flow correctly, if you take on a $9k PITI then you wouldn't have any non-retirement savings each month, right? So every time you have a large one-off expense (annual vacations, new car, house repair/renovation), you would be drawing upon your existing savings rather than being able to save up for it. This doesn't seem sustainable?

Do you have a lot of equity in your current house? Can you make a higher down payment so your PITI is lower?

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OP here - you are right - $9K would eliminate our positive savings cash flow. Certainly we could reduce it to $8K and have $1K monthly positive savings cash flow.

We have enough savings and equity in our current house to put 20% down on a new house (so $300-$400K).  And accumulate about $90K in cash savings each year. I don't know why we would put more than 20% - though - PMI is done for, and I don't see why getting a smaller mortgage just for the sake of having a small mortgage is better (besides the positive cash flow issue).

Waiting as year to reduce the principal by $90K doesn't make sense to me if I am able to borrow at <5% (and possibly refinance if the rate drops below 3%).  Suppose I had $2M in cash.  I  don't think I would buy the house in all cash (and have a $0 PITI).  I think the right (income maximizing) thing to do is put pay exactly $400K down on a house (to eliminate PMI) and do something else with the remaining $1.6M that garners returns greater than my expected borrowing rate.  or am I being financially illiterate here?

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