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 Cordova Mom & XAMSX, I understand what you are saying and believe me, I do NOT want to walk, but my husband is freaking out and has me freaked out. We didn't go into this with a "we'll see what happens and pull out if we have to" ideal, we really want the house. We understand we signed a legally binding contract. We didn't put a contingency because of two reasons: 1.) we were told by our agent and the listing agent that they would not consider a contingent offer and 2.) we did the math based on what we would both make off of our houses (after checking comps, paying commission, DOM, closing, etc.) and with those figures we figured we could suffer with 3 mortgages for a few months, knowing that our houses would sell. Also, as an extra cushion we originally asked for a 100 day settlement period, we got a 75 day. Avg. DOM in both our neighborhoods was 30, no more than 60. Our inexperience obviously shows as my house is not going to sell for anything close to what we figured or what comps support. I can't even get any calls on it!! Fortunately, DH's house sold in less than 24 hours at full-price; unfortunately, prices in my neighborhood have dropped dramatically in a short span with a glut of new homes on the market. They are currently selling for $30k-$25K less than they did even in the Fall. I will make about $30k less than what we thought. As I said, we are obviously very inexperienced with this whole process and our agent is a new agent w/no experience either. 3 doofuses = holy crapola!! I have been very frustrated with our agent as well...she really didn't "do" anything for DH's house and it sold on it's own which I'm definitely not complaining about; however, mine has been a disappointment. I have asked more than 1/2 dozen times to have a correctly spelled listing, a good, solid description and better pictures (w/o raindrops on the lense; daylight in the pictures instead of darkness would be nice too). I have asked them to put me on different sites, my realtor.com listing shows the picture of the closet! She is late too everything, doesn't do what she says she will and "too nice" to other agents rather than being aggressive in getting answers. I'm just overly depressed and frustrated. I feel I have DH in one ear and my desire for the house in the other.

"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.

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