Reply to Afford $1.8M on 300K?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]I haven’t followed the entire thread, but has OP indicated how much savings they have? One option is to make a large down payment to make the monthly payments affordable. Our HHI is $225k and we will probably buy at $1.5 million but we have very substantial savings due to being frugal, investing wisely, and having no kids. So we will put at least 50% down and still have plenty of investments and savings left (at least seven figures left). I guess based on the comments here we will be viewed as the poors in our new neighborhood when we buy but who cares. [/quote]

Op here - I haven't said much about my savings because I didn't think it was relevant to the conversation - I would say my finances are similar to yours. Probably around $1M in fairly liquid assets. Others on this thread have opined that smaller mortgage are better, and i still don't understand why. [b] In your case, you are paying down 50% in order reduce monthly payments.  Can I ask why you don't consider downing 20% and separately investing the other $450K [/b](~ 1.5M * .3)?  If a bank is willing to lend me an extra $450K for tax advantaged and (relatively) low interest rates, why wouldn't I do that?  Or do you imagine that you can't find investment opportunities that garner greater than 3.5 (or 4 or 4.5%) ROI?  If no such opportunity arises, I don't see why you couldn't use the $450K to reduce your mortgage principal later on.  If the monthly payment @ a 20% DP becomes too large, you also could use the $450K to recast the mortgage to lower the monthly payments later on.

I'm asking because (as others on this thread have surmised), I'm financially illiterate and I'd like to crowd-source some ideas.

Thanks in advance

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20% down and investing the rest would be financially astute.

20% down and [b]putting the rest in a savings account[/b] because you don't invest outside of retirement and don't want to invest in a bear market -- which is what you said you've been doing -- is idiotic.  The money you have earning 1% a year is losing value every day due to inflation.  You're not even beating the rate on your mortgage, and then you're setting yourself up to have no spare cash flow every month.  Unless you enjoy stress there's no upside.
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