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Soliciting Free Advice: Opportunity to Buy - Pay Cash or Mortgage?
Posted on 4/8/21 at 12:11 am
Posted on 4/8/21 at 12:11 am
I have been in the market for a couple of years to purchase a home but have been renting in the interim.
Landlord offered to sell me the residence at where I have been renting for what I believe to be a very fair price. The discount factors in that we wouldn't need traditional agents and I know what needs repair/upgrades.
If you had $1.25m in accessible CASH (not touching 401k), would you buy the residence for $300k cash and not worry about a note or put down 20% and take advantage of the low mortgage rates (either a 15 or 30 year)?
I appreciate any opinions. I know I get what I pay for. Leaning towards the mortgage and keep working my cash by investing it BUT for those with paid off homes - how mentally liberating is it to not pay a note or mortgage each month?
Landlord offered to sell me the residence at where I have been renting for what I believe to be a very fair price. The discount factors in that we wouldn't need traditional agents and I know what needs repair/upgrades.
If you had $1.25m in accessible CASH (not touching 401k), would you buy the residence for $300k cash and not worry about a note or put down 20% and take advantage of the low mortgage rates (either a 15 or 30 year)?
I appreciate any opinions. I know I get what I pay for. Leaning towards the mortgage and keep working my cash by investing it BUT for those with paid off homes - how mentally liberating is it to not pay a note or mortgage each month?
16
Posted on 4/8/21 at 12:53 am to UncleLester
Personally,what I would do is 15 year mortgage and use cash for repairs ,upgrades.We had a 15 year mortgage and paid it off in 10 (age 50) I think we would have been better off to go the whole 15 years and invest the excess payments.My wife freaks out over debt so it was huge to her to get it paid off early,me not so much.We did increase our investments after the house was paid off and have done well but it’s not the way I would have done it if it was just me.
I’ve never gotten in trouble with debt but she and I have had different life experiences.She can’t stand having debt of any kind.
I’ve never gotten in trouble with debt but she and I have had different life experiences.She can’t stand having debt of any kind.
This post was edited on 4/8/21 at 1:05 am
Posted on 4/8/21 at 1:48 am to LSUA 75
if you are financially disciplined I would mortgage. A mortgage is just about the cheapest money you can borrow and you should easily be able to out earn the interest fees with the cash that would have been used to pay off the house
Posted on 4/8/21 at 6:55 am to UncleLester
Is a mortgage any scarier than paying rent?
You do pay rent right now, right?
Does that stress you?
20-25% down and 15 year mortgage (whatever gets you the lowest rate on the market).
You do pay rent right now, right?
Does that stress you?
20-25% down and 15 year mortgage (whatever gets you the lowest rate on the market).
Posted on 4/8/21 at 7:11 am to UncleLester
Do what you think is best, but I think outright ownership is the way to go, at least for your first property. The comfort of being debt free seems like the play for me but that may just be a personal preference
Posted on 4/8/21 at 8:21 am to UncleLester
quote:
how mentally liberating is it to not pay a note or mortgage each month?
You’ll still have property taxes and insurance to pay, so it’s not like there won’t be any bills due.
For someone holding 1.25m cash, the mortgage payment on a $300k house is peanuts. I like the idea of the 15 or 20 year loan also in this instance.
Go with your instinct and take a mortgage. Money has never been cheaper.
Posted on 4/8/21 at 8:26 am to UncleLester
Get a 10yr IO for the Mortgage Interest Deduction
Posted on 4/8/21 at 9:45 am to UncleLester
Mortgage.
You also have to factor in capital gains tax you'll pay to access the cash (assuming it is invested). If you actually have $1.25m cash just sitting around uninvested you would be better off investing it even paying cash for the house would be better than cash in bank.
You also have to factor in capital gains tax you'll pay to access the cash (assuming it is invested). If you actually have $1.25m cash just sitting around uninvested you would be better off investing it even paying cash for the house would be better than cash in bank.
Posted on 4/8/21 at 10:47 am to UncleLester
Today's rates are coming in around 2.5% for 15 year - pretty low amount of interest if you want to take your cash and invest in other sources of income for retirement
Posted on 4/8/21 at 2:48 pm to itsbigmikey
quote:
Do what you think is best, but I think outright ownership is the way to go, at least for your first property. The comfort of being debt free seems like the play for me but that may just be a personal preference
Disagree. If you buy outright that cash is all gone now. If you carry a mortgage you'll still spend that much, you just don't lose it all now, and have the opportunity to be better off in the end by making more interest than you're paying.
With autopay, you don't even realize you're paying it each month.
Posted on 4/8/21 at 2:54 pm to UncleLester
20% down and take advantage of historic low mortgage rates during a time when inflation is kicking up. Given inflation, you are getting free money from the bank to pay the interest.
Posted on 4/8/21 at 2:58 pm to UncleLester
quote:
how mentally liberating is it to not pay a note or mortgage each month?
it is peace of mind you never knew was possible
Posted on 4/8/21 at 3:01 pm to UncleLester
Thank you all for your perspectives. I sincerely appreciate it.
I am going to pull the trigger on 25% down and do a 15 year mortgage.
I am going to pull the trigger on 25% down and do a 15 year mortgage.
Posted on 4/8/21 at 3:12 pm to itsbigmikey
quote:That's one expensive comfort.
The comfort of being debt free
Posted on 4/8/21 at 3:27 pm to UncleLester
quote:
If you had $1.25m in accessible CASH (not touching 401k), would you buy the residence for $300k cash and not worry about a note or put down 20% and take advantage of the low mortgage rates (either a 15 or 30 year)?
I appreciate any opinions. I know I get what I pay for. Leaning towards the mortgage and keep working my cash by investing it BUT for those with paid off homes - how mentally liberating is it to not pay a note or mortgage each month?
So is it in cash or is it invested and you’ll have to sell to raise the cash?
Posted on 4/8/21 at 4:32 pm to slackster
quote:
So is it in cash or is it invested and you’ll have to sell to raise the cash?
Roughly 60% in an eTrade account. 20% in checking and savings accounts at the moment. 20% in miscellaneous including some vested company stock awards and BitCoin.
Posted on 4/8/21 at 4:56 pm to UncleLester
30 yr mortgage.
Posted on 4/8/21 at 5:17 pm to UncleLester
quote:
Roughly 60% in an eTrade account. 20% in checking and savings accounts at the moment. 20% in miscellaneous including some vested company stock awards and BitCoin.
Getting 60-75k out of the checking/savings is your plan, I’m assuming?
Posted on 4/8/21 at 5:54 pm to UncleLester
quote:
If you had $1.25m in accessible CASH (not touching
This guy sold his at picks in February
Posted on 4/8/21 at 7:04 pm to slackster
quote:
Getting 60-75k out of the checking/savings is your plan, I’m assuming?
Yes sir.
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