how much mtg?

[rodickno]

i currently have a second home worth 2.5m with 700k mtg. i am considering purchase of a primary home for 3m. it requires 900k down. in order to do that, i would take 400k equity out of the second home, and drain liquidity down to about 500k. it would leave me with real estate of 5.5m and mtg of 3.2m... 2.8m would be 30yr and 400k would be short term. away from that i have liquid assets of 500k, and illiquid assets of 2.2m. they are locked up funds but i can access them starting in about a year.
my salary can carry the mtg...but curious....too much debt??

[rj.phila]

maybe wanna read around here a little, just as a heads up...its a friendly bunch, but ill be surprised if you will find anyone that doesnt think that 3M of debt is "too much". there's....ummmm......alot of talk about subaru's, gas prices, and overpriced $10 mojito's around here......make sense?

ok, sorry, i gotta ask....is this a serious question? im on candid camera, right?

[disneysteve]

my salary can carry the mtg...but curious....too much debt??

We can't answer this question without any numbers. You say your salary can carry the mortgage but apparently there is some reason you are questioning that. Tell us how much you earn and what your monthly expenses are. Do you have any other debts? How much are you saving for retirement? Lacking actual numbers, there is no way to judge whether or not this would be too much debt for you.

[wincrasher]

Since you are talking in the realm of super-jumbo mortgages here, good luck on qualifying for one. The requirements are steep and there is plenty of scrutiny, so I imagine that if you can qualify, then you balance sheet is in good shape.

But I'll throw out this - real estate "equity" is a shaky concept right now - you say a property is worth 2.5m or 3m, but that is only if there is a buyer. Buyers with that kind of cash or can get an almost impossible to get mortgage.

I see this as going from a situation of significant positive net worth, to essentially negative net worth, because the value of real estate equity is not a sure thing.

Additionally, such high value trophy properties should be a reflection of your net worth. I'd guess a person with $5million in personal real estate (homes) would have significant portfolio of investments or owns his own business - say in the neighborhood of $10-20 million.

But average income people go in every day and lease a Mercedes, so what do I know?