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Started By
Message
Looking at buying a new home. Need advice on equity.
Posted on 9/17/25 at 11:13 pm
Posted on 9/17/25 at 11:13 pm
We are looking at selling our home and buying in a neighborhood that is all new construction.
Selling our home would give us a pretty nice check in our pocket. It would pay our down payment. With the extra though, we were considering taking a portion of the rest and buying a used SUV with cash to avoid the note and putting the rest in savings.
Does this seem wise? Would it be smarter to put some of the equity in an account that will grow over time?
This is the first time we’ve sold a home as we’ve been in our current home since we got married.
Any tips or advice is appreciated.
Selling our home would give us a pretty nice check in our pocket. It would pay our down payment. With the extra though, we were considering taking a portion of the rest and buying a used SUV with cash to avoid the note and putting the rest in savings.
Does this seem wise? Would it be smarter to put some of the equity in an account that will grow over time?
This is the first time we’ve sold a home as we’ve been in our current home since we got married.
Any tips or advice is appreciated.
6
Posted on 9/17/25 at 11:18 pm to King of New Orleans
Why wouldn’t you apply all if it to the new home to reduce the cost of your mortgage?
Posted on 9/17/25 at 11:25 pm to King of New Orleans
quote:
We are looking at selling our home and buying in a neighborhood that is all new construction.
What year did you buy your first home?
Do you have student loans or credit card debt?
Posted on 9/18/25 at 8:22 am to King of New Orleans
quote:
Does this seem wise?
Lowest cost of money over time is how I approach these types of trade off decisions.
First, congrats on the equity earned on existing home.
How much is the mortgage interest rate on new home? Term?
What is car loan interest rate on a used SUV? Term?
Or towards any other debt with high interest rates…
I would put the existing home equity money towards the highest interest rate (and given home mortgage likely a much longer term, that is going to make most sense given today’s mortgage rates).
One step further, I may try to create a “positive spread” opportunity. Might your risk/return appetite include taking some of the existing home equity and investing it (eg, a broad stock market index such as VTSAX)? In a Roth IRA?
For example, VTSAX 11-12% 5+ year return less cost of mortgage of 6% is 5-6% positive spread that, over long period of time, builds wealth.
However, if peace of mind of paying off home sooner matters more to you, pls ignore.
This post was edited on 9/18/25 at 8:25 am
Posted on 9/18/25 at 9:20 am to SquatchDawg
quote:smartest thing i ever did, in 2006. ten years later the house was paid for
Why wouldn’t you apply all if it to the new home to reduce the cost of your mortgage?
Posted on 9/18/25 at 9:25 am to SquatchDawg
quote:This would be much bigger savings.
Why wouldn’t you apply all if it to the new home to reduce the cost of your mortgage?
Personally, don't underestimate how nice it'll be to have a bit of cash after you move in. There's nothing wrong with upgrading furniture, art, outdoor spaces, etc.
(if the circumstances allow it).
Posted on 9/18/25 at 9:54 am to King of New Orleans
depending on the interest rate and amount of loan you could look into buying down the interest rate. could save you a hundred thousand over the life of the loan
Posted on 9/18/25 at 12:14 pm to King of New Orleans
why set yourself back? whatever you have in the old house would go into the new house if it was me.
Posted on 9/18/25 at 2:01 pm to SquatchDawg
quote:
Why wouldn’t you apply all if it to the new home to reduce the cost of your mortgage?
For those asking this, for every $10k, you’re only lowering the mortgage by $50. So say I pocked $70k, that’s $350 off the mortgage. Yeah, it’s nice but I could save some of the assumed $70k and clear out other small debts, pay for a car in cash, and start an IRA.
Posted on 9/18/25 at 3:08 pm to notsince98
In your scenario, the equity you're taking out of your mortgage pile is being traded for a depreciating asset. Better chance of the home appreciating over time. If you're asking financially which one you'd be better off taking, probably the house. But that's not always the only deciding factor in these decisions.
Obviously the mortgage rate vs. the auto rate is another factor. Historically, mortgage has been cheaper, but I have no clue where both are at the current moment.
Obviously the mortgage rate vs. the auto rate is another factor. Historically, mortgage has been cheaper, but I have no clue where both are at the current moment.
Posted on 9/18/25 at 9:22 pm to King of New Orleans
quote:if you have any other debt, particularly consumer debt, pay that immediately. other than that, your proceeds are better used to pay down on your house note
eah, it’s nice but I could save some of the assumed $70k and clear out other small debts, pay for a car in cash, and start an IRA.
Posted on 9/19/25 at 7:43 am to cgrand
"your proceeds are better used to pay down on your house note"
How do you justify this mathematically? Most are willing to assume +8% return from mutual funds. Mortgage is unlikely to be near 8% and isn't the interest for personal home also tax deductible, as well?
How do you justify this mathematically? Most are willing to assume +8% return from mutual funds. Mortgage is unlikely to be near 8% and isn't the interest for personal home also tax deductible, as well?
This post was edited on 9/19/25 at 7:43 am
Posted on 9/19/25 at 9:20 pm to King of New Orleans
In the house...appreciation
Posted on 9/20/25 at 11:19 am to Artificial Ignorance
Let’s think outside the box for a minute.
Keep the house and rent it. Take a HELOC on house 1 and put it in a brokerage account. Then take margin on the brokerage account and invest it in something sexy. SUV pays for itself in 12 months.
Keep the house and rent it. Take a HELOC on house 1 and put it in a brokerage account. Then take margin on the brokerage account and invest it in something sexy. SUV pays for itself in 12 months.
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