One part I haven't seen anyone mention is what a fantastic deal you're getting on your low-interest rate mortgage. If you don't give up your current mortgage and rent your current house out instead, you may find it hard to secure a second mortgage in CA, purely based on how expensive housing is in that region of CA.Own our house, worth 1.2 million, estimated mortgage remaining $800,000 @ 3.5%
If you give up your mortgage, you are letting the bank off the hook. You can even compute their loss and your gain you're giving up in cash terms. Assume $800k @ 3.5% and you can only get a Jumbo loan @ 6% on the market today. For a 30-year mortgage, they are commonly indexed to 10-year Treasuries, so assume you're short a 10-year Treasury worth $800k and the interest rate climbed 2.5%. By the 1% NAV change per 1% change in interest per 1 year of duration, that's worth 2.5% x 10 = 25% of the loan. So by keeping your mortgage loan on the books, they are underwater on it by 25% x $800k = $200k, and your low-interest loan is worth $200k gain to you. Are you sure you want to let the bank off the hook so easily?
In addition to taking a $400k paycut, you would be losing a low-interest mortgage that's worth $200k in monetary terms, so this should also figure into your decision-making process.
My recommendation would be to tell them how much you are getting paid right now, and ask for a counteroffer. Even if they can't match it, maybe they will meet you halfway and get you another $200k or so. It's always possible they are trying to lowball you (in what universe is $600k is considered low?), so there's no harm in asking especially since it uproots your entire family and forces them to move halfway across the country.
Statistics: Posted by train12 — Sun Oct 20, 2024 1:48 am