We got a 30 year fixed with much more than 20% down. The bank gave us a 3.25% rate.
Strangely, I’d actually argue that I feel delevered. The main reason is because I reduced my after effective after tax monthly expenses by buying. That might sound weird, but I was basically overpaying for a rental. So buying actually increases my cash flow position going forward. Yes, I feel more levered to stocks now because I don’t see the cash I invested in the house, but I know how stable this asset is on a long time horizon so I actually feel better owning than I do leaving the money in bonds or cash right now.
My thinking was basically that the cash/bonds I own are not going to do much better than real estate in the next 10 years. I’m in a beachside CA town where the prices of homes tend to be correlated with the growth in very high incomes (4-5% per year). So it’s hard for me to imagine doing worse than bonds with the cash we invested in the house.
I’d argue that my case is a bit unique given the location and property we purchased. So it’s a little hard to generalize and compare it to other parts of the country. We really were patient on a specific location and then we were really aggressive when we saw something we liked. So, I guess you could say that the old real estate saying “location, location, location” was a major driver in my decision. I’d venture to argue that, over a 10 year time horizon, there’s virtually no downside in the property I purchased. So I was just going for margin of safety over everything else and that is mainly a function of the uniqueness of the property I bought….
Not sure if that helps, but I hope so!