Hello Forum,
Wife and I are planning to finally move out of our Condo and into a proper house. We own the Condo, est value ~$250k. Looking at houses in the range of $350-450k. Mortgage rates in our area are around 5-7%, I expect we can come close to 5% if we shop around a bit at credit unions. Most of our investments outside 401ks and HSAs are are VTSAX and VMFXX. I see three general options:
1. Big Mortgage: Take out mortgage for the house with a minimum down payment (enough to avoid paying points), and invest the condo sale $$ into VTSAX and VMFXX.
2. Small Mortgage: Take out mortgage to purchase a house, putting all proceeds from condo sale towards house, plus some savings, but keeping a healthy amount of savings in VTSAX and VMFXX.
3. No Mortgage: Buy house with cash (which would stretch us a bit thin savings wise, but doable)
If it were 5-10 years ago when rates were <3%, I'd say Option #1 would be an easy decision. Today with Money Market funds getting around 5%, and a mortgage rates being best case 5%, the ideal option is less clear. I suspect it's probably #2.
FYI --- We don't intent to buy a house that requires alot of repairs/modifications, other then perhaps paint and flooring.
Thanks for any suggestions/input!!
Wife and I are planning to finally move out of our Condo and into a proper house. We own the Condo, est value ~$250k. Looking at houses in the range of $350-450k. Mortgage rates in our area are around 5-7%, I expect we can come close to 5% if we shop around a bit at credit unions. Most of our investments outside 401ks and HSAs are are VTSAX and VMFXX. I see three general options:
1. Big Mortgage: Take out mortgage for the house with a minimum down payment (enough to avoid paying points), and invest the condo sale $$ into VTSAX and VMFXX.
2. Small Mortgage: Take out mortgage to purchase a house, putting all proceeds from condo sale towards house, plus some savings, but keeping a healthy amount of savings in VTSAX and VMFXX.
3. No Mortgage: Buy house with cash (which would stretch us a bit thin savings wise, but doable)
If it were 5-10 years ago when rates were <3%, I'd say Option #1 would be an easy decision. Today with Money Market funds getting around 5%, and a mortgage rates being best case 5%, the ideal option is less clear. I suspect it's probably #2.
FYI --- We don't intent to buy a house that requires alot of repairs/modifications, other then perhaps paint and flooring.
Thanks for any suggestions/input!!
Statistics: Posted by LarryDavid — Sun Dec 29, 2024 10:31 am — Replies 3 — Views 211