Hi Saphire, Very easy for you to say without concrete examples. I can try to post case examples for you as available and permission is granted. I have a significant portfolio of such cases... but I do need to get permission, and then put them in a postable format. May take me a bit, but I *WILL* do it... had been on my list anyway. So assuming I am trading up in value and will be financing 80% (because no one will give me the house at 100% and I do not have enough cash to buy it outright) Do you mean no bank will LEND 100% on that house? Be aware, you ARE financing 100% of the purchase. Apparently you'll be taking 80% from the bank at the cost of their interest charges, and 20% from your family at the cost of the safe returns available. There's no free lunch... ALL of the money comes at a cost, including the money you take away from your family's safety reserves and growth investments. if I buy an expensive house (for me) you are right that this affects my portfolio as a whole so how do I get the least expensive rate or product that also is nbot subject to rate increases if the market changes Fortunately for you, right now the expense premium on longterm fixed loans is very small above the more timeframe realistic 5 and 7 year fixed intermediary programs. You can likely get the risks completely bank-carried at just 1/4% or so above the 5 year terms. I'd suggest being a little 'suspicious' of ol' Mr. Market, however... when Mr. Market makes longterm fixed loan costs extremely attractive relative to shorter term periods, the Market knows that the shorter term programs are more likely to become significantly cheaper as they adjust (thus the "market trickery" to entice the consumer into the more expensive programs permanently.) Without concrete examples or references, either as to stradegies that work or references to formulas or analysis it all sounds very ambigious, mysterious and a bit glib. It certainly takes an open mind for numbers, and the ability to visualize offsetting growth or cost curves. The bases of the entire conceptual issue are; Rates are relative; When costs of borrowing increase, yields on savings/investments increase, and vice versa. Cash Is King; The costs of being illiquid in emergency can be catastrophically worse than the costs of staying liquid (in carrying costs on the leverage to do so,) It is very easy to say a FMR is expensive but without providing either alternatives or examples or references as to why that is so, I have to question it Currently the immediate face costs on a 30 FRM versus (as example) a 5 yr ARM are minimal... very financially unusual, which DOES definitely call for suspicion. The more obscure costs on a Fixed are the ongoing higher carry costs incurred when rates shift to the downside on the loan, but you are stuck at the higher rates unless/until you incur another round of transaction costs to reset the financing. Eliminating uncertainty is more efficiently done by matching income yield instruments (savings & investments) to leverage instruments (mortgages.) Properly placed and managed the spread continually works in your favor, and you remain much safer as you are not locked away from your liquidity. CLEARLY explain how this works or various stragies that might work for a trade up house that is intended to be held indefinitely How long you intend to OWN is irrelevant, (what DOES matter is how long you intend to take to reach financial independence,) but I do have a few cases that reflect the same situation. I'll see if I can get them illustrated to present as soon as feasible. Cheers, Dave Donhoff Strategic Equity & Mortgage Planner

Hi Sparksals, Of course the lender is offering you an 80/20 loan. That's because they get two commissions off of it because it's two different loans. Ehhhh... no... not so much. Anit-predatory lending regulations restrict the fees that a loan can carry as a percentage of the loan itself... and because these regulations vary widely from region to region, most lenders "toss in the towel" and charge no fees on a 2nd lien at all, requiring all costs to be placed against and measured against the 1st lien only. If you can avoid that, do so at all costs as the 20% portion is most likely a HELOC and at a higher rate of interest. While it is CURRENTLY true that 2nd lien HELOCs are at a premium to most 1st lien mortgages, this is not always the case. Further, fixed loan 2nd liens can be very competitive, sometimes even matching the rate of the 1st lien loan. The entire financial logic of splitting loans into an 80/x combo is to avoid the non-deductible costs of PMI without giving up the benefits of the leverage itself. Another way to avoid PMI is to pay for it outright. Certainly is ONE way... though not usually a very smart (financially) way. Unleveraged real estate (ESPECIALLY primary home real estate) is safest and most financially advantageous to the owners when properly leveraged to the maximum that the owner's safe cashflow budget supports (after all reserves and living costs are considered.) Cheers, Dave Donhoff Strategic Equity & Mortgage Planner

"but I would repay with after-tax dollars, and again pay taxes on that money when I eventually withdraw it." If instead of borrowing from your 401k you took out a bank loan, you'd still be paying it with after tax dollars, wouldn't you? The money you left in the 401k would hopefully grow in value. When you eventually withdraw it, you're still going to have to pay taxes on the money it made you, aren't you? But don't forget, you 401K money isn't guaranteed to make a profit. It might go down in value, maybe even drastically, as in 2000. If you had loaned yourself 50K in early 2000 and repayed it to yourself over five years at a reasonable interest rate, you'd be way ahead of where you would have been if you instead had left the 50K in the 401K, only to watch it to dwindling away, all the time makinge payments to the bank and letting them profit on the interest. The stock market's been doing well lately, so borrowing from the 401K isn't such an attractive option right now. But to rule it out automatically no matter what the current financial environment might because of pat statemnts like "you put it in with pretax dollars and have to pay it back with after-tax dollars" isn't making an informed decision. People should compare the various ways of borrowing money and see where they come out best.

Home equity line of credit. Basically, you are putting a second mortgage on your existing home in order to buy the new one. Obviously, you need to have quite a bit of equity in the existing house to use this strategy, which is why many people in this situations get bridge loans instead. We've done it and it worked out fine. It all boils down to whether you can comfortably make all the loan payments involved. If it's really a financial stretch or if you're the type who can't help fretting about the future, then you're probably best off not doing it because you'll drive yourself crazy worrying when/if your existing house will sell.