Originally Posted by
richwang
By the way, why would you want to stretch yourself to make 90% loan? Can you afford to pay the monthly installment when interest rates go up?
For example, if you have $100K, you can buy $500K house with $400K loan. If the interest rate is 2% and you pay it in 30 years, your monthly payment is about $1500.
Now with 90% loan, you could buy a $1M house with $900K loan. Your monthly payment will be about $3300. Here are the what if for interest rate changes:
2% $3326
3% $3794
4% $4296
5% $4831
6% $5395
7% $5987
8% $6603
Are you still comfortable with your monthly payment? You cannot use the current historical lowest interest rate to calculate. The low interest rate wouldn't stay so low for 30 years.
The worst thing is when interest rate goes up, stock market goes down, and likely property market. If you are forced to sell your house at $800K (20% property price drop is nothing), and you will loss everything and still own the bank $100K!
Think twice before you make 90% loan. Thanks,