100k short term park

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Utahdogowner
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100k short term park

Post by Utahdogowner » Fri Sep 15, 2017 11:21 am

I have come in to a large payout from the sale of some real estate. As such I have an extra 100k laying around. Retirement accounts are already maxed. I have no debt but my mortgage at 4%. We plan to move sometime in the next year to our (hopeful) ”forever” home. This 100k will almost certainly be used for that down payment.

So do I park it in a jumbo CD or dump it at my current mortgage or something else?

Thanks in advance!

TigerNest
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Re: 100k short term park

Post by TigerNest » Fri Sep 15, 2017 11:29 am

Consider an online high interest savings account like Ally, Barclays, Capital One or Goldman, which will give you greater flexibility and liquidity than a CD at similar (or maybe even better) rates.

All_About_Benjis
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Re: 100k short term park

Post by All_About_Benjis » Fri Sep 15, 2017 12:09 pm

Ally is offering a "no-penalty" 11 month CD with a 1.5% interest rate. The money can be withdrawn w/accrued interest anytime after 6 days.

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Kevin M
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Re: 100k short term park

Post by Kevin M » Fri Sep 15, 2017 1:05 pm

Given that you plan to put it into house equity within a year anyway, I'd use it to pay down the 4% mortgage. You won't get a risk-free return anywhere close to that, even for terms of much longer than one year (even the 30-year Treasury yield is only 2.77%). If for some reason you want the liquidity, then the Ally no-penalty CD at 1.5% is a good deal (the 1-year Treasury is at 1%, but you can find online savings accounts paying at much as 1.4%).

Kevin
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Toons
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Re: 100k short term park

Post by Toons » Fri Sep 15, 2017 1:13 pm

Ditto
Pay down the mortgage
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Utahdogowner
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Re: 100k short term park

Post by Utahdogowner » Fri Sep 15, 2017 10:14 pm

Thanks for your input, everyone. I think we will just add it to our mortgage.

Thanks again!

ThePrince
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Re: 100k short term park

Post by ThePrince » Sat Sep 16, 2017 9:01 pm

Kevin M wrote:
Fri Sep 15, 2017 1:05 pm
Given that you plan to put it into house equity within a year anyway, I'd use it to pay down the 4% mortgage. You won't get a risk-free return anywhere close to that, even for terms of much longer than one year (even the 30-year Treasury yield is only 2.77%). If for some reason you want the liquidity, then the Ally no-penalty CD at 1.5% is a good deal (the 1-year Treasury is at 1%, but you can find online savings accounts paying at much as 1.4%).

Kevin
+1

ThriftyPhD
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Re: 100k short term park

Post by ThriftyPhD » Sat Sep 16, 2017 10:21 pm

One benefit of keeping it liquid is so you can have it free to make an offer on your next home while selling your current property. If you put it all on your current mortgage, your next purchase may need a contingency added if you need to sell your current property before finalizing on your next. Depending on the market, the seller may not want to deal with that contingency.

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TomatoTomahto
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Re: 100k short term park

Post by TomatoTomahto » Sun Sep 17, 2017 7:08 am

ThriftyPhD wrote:
Sat Sep 16, 2017 10:21 pm
One benefit of keeping it liquid is so you can have it free to make an offer on your next home while selling your current property. If you put it all on your current mortgage, your next purchase may need a contingency added if you need to sell your current property before finalizing on your next. Depending on the market, the seller may not want to deal with that contingency.
+100. Fwiw, my usual answer is "pay down the mortgage," but OP represents the one exception.

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Kevin M
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Re: 100k short term park

Post by Kevin M » Sun Sep 17, 2017 2:59 pm

ThriftyPhD wrote:
Sat Sep 16, 2017 10:21 pm
One benefit of keeping it liquid is so you can have it free to make an offer on your next home while selling your current property. If you put it all on your current mortgage, your next purchase may need a contingency added if you need to sell your current property before finalizing on your next. Depending on the market, the seller may not want to deal with that contingency.
I'm not sure this makes sense, but we'd need more details. Since OP is talking about $100K that would be used as a down payment, the implication is that a mortgage loan will be required. Would OP be able to qualify for a new loan before paying off the loan on the current home? If so, and if OP is in a position to handle the carrying costs of two homes while trying to sell the current home, and would want to do that, then it's a good thought.

Kevin
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Utahdogowner
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Re: 100k short term park

Post by Utahdogowner » Fri Sep 22, 2017 1:05 pm

Kevin M wrote:
Sun Sep 17, 2017 2:59 pm
ThriftyPhD wrote:
Sat Sep 16, 2017 10:21 pm
One benefit of keeping it liquid is so you can have it free to make an offer on your next home while selling your current property. If you put it all on your current mortgage, your next purchase may need a contingency added if you need to sell your current property before finalizing on your next. Depending on the market, the seller may not want to deal with that contingency.
I'm not sure this makes sense, but we'd need more details. Since OP is talking about $100K that would be used as a down payment, the implication is that a mortgage loan will be required. Would OP be able to qualify for a new loan before paying off the loan on the current home? If so, and if OP is in a position to handle the carrying costs of two homes while trying to sell the current home, and would want to do that, then it's a good thought.

Kevin
I could qualify, I think, but man that would be stressful to be carrying two mortgages. The market is REALLY hot right now in Utah, with many homes being snatched in the first 24 hours of posting.
I'm going to have to digest this for a minute before deciding. The difference will be ~2%, and for 6-12 months. That should be ~1k if it were a year, so perhaps not the most pressing distinction, but certainly still worth considering. Is the flexibility of locking down a house worth an extra $500 - 2000? Probably, if it's the right house.

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