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Liquidate Holdings for Downpayment

Posted: Mon Dec 09, 2019 10:19 am
by B3GINN3R
Looking into buying a home now. DW and I are 27 years old. As background, HHI is about 290k and expected to go up to around 300-400 within the next couple years (obviously things happen so who knows). We currently live in a 2bd/1.5ba in a HCOL city and would like to stay in the city, but want a 3 or 4 bedroom. I work from home often etc.

Overview of current amounts:
40k cash
95k non-taxable
95k taxable (could liquidate)

We are looking at houses in the 650-750k range. Does this seem way to high? I know its high, but am willing to cut costs on other things (restaurants, cars, etc) to make wife/future baby comfortable.

We have no other debt. We currently pay 3k/mo in rent and will otherwise stay in our location, for comparison purposes. Rent for a 3dr or 4 br would be around 4000-5000 in the location we are in now (which seems insane), and we are not thrilled with the concept of going out to the burbs. Also, as shown in the post, would it be worth it to liquidate taxable amounts for a down payment if we decide we dont want to wait to save up enough cash (would otherwise wait one more year).

Thanks in advance for any thoughts!

Re: Liquidate Holdings for Downpayment

Posted: Mon Dec 09, 2019 10:25 am
by dm200
B3GINN3R wrote: Mon Dec 09, 2019 10:19 am Looking into buying a home now. DW and I are 27 years old. As background, HHI is about 290k and expected to go up to around 300-400 within the next couple years (obviously things happen so who knows). We currently live in a 2bd/1.5ba in a HCOL city and would like to stay in the city, but want a 3 or 4 bedroom. I work from home often etc.
Overview of current amounts:
40k cash
95k non-taxable
95k taxable (could liquidate)
We are looking at houses in the 650-750k range. Does this seem way to high? I know its high, but am willing to cut costs on other things (restaurants, cars, etc) to make wife/future baby comfortable.
We have no other debt. We currently pay 3k/mo in rent and will otherwise stay in our location, for comparison purposes. Rent for a 3dr or 4 br would be around 4000-5000 in the location we are in now (which seems insane), and we are not thrilled with the concept of going out to the burbs.
Thanks in advance for any thoughts!
I would look for a low/no down payment mortgage - and keep your investments - you have no other debt.

Your working from home is one reason for a slightly larger house. It looks to me that you can afford such a house - especially since you have no other debt and, it seems, can live modestly if you need to. Keep the savings/investments - one reason is to cover unexpected expenses that may pop us and/or some loss of income. You seem to have the time to look for a house that meets your needs/wants and is a good fit for you.

Re: Liquidate Holdings for Downpayment

Posted: Mon Dec 09, 2019 10:29 am
by B3GINN3R
dm200 wrote: Mon Dec 09, 2019 10:25 am
B3GINN3R wrote: Mon Dec 09, 2019 10:19 am Looking into buying a home now. DW and I are 27 years old. As background, HHI is about 290k and expected to go up to around 300-400 within the next couple years (obviously things happen so who knows). We currently live in a 2bd/1.5ba in a HCOL city and would like to stay in the city, but want a 3 or 4 bedroom. I work from home often etc.
Overview of current amounts:
40k cash
95k non-taxable
95k taxable (could liquidate)
We are looking at houses in the 650-750k range. Does this seem way to high? I know its high, but am willing to cut costs on other things (restaurants, cars, etc) to make wife/future baby comfortable.
We have no other debt. We currently pay 3k/mo in rent and will otherwise stay in our location, for comparison purposes. Rent for a 3dr or 4 br would be around 4000-5000 in the location we are in now (which seems insane), and we are not thrilled with the concept of going out to the burbs.
Thanks in advance for any thoughts!
I would look for a low/no down payment mortgage - and keep your investments - you have no other debt.

Your working from home is one reason for a slightly larger house. It looks to me that you can afford such a house - especially since you have no other debt and, it seems, can live modestly if you need to. Keep the savings/investments - one reason is to cover unexpected expenses that may pop us and/or some loss of income. You seem to have the time to look for a house that meets your needs/wants and is a good fit for you.
Thanks! My concern on that would be PMI. Is that an issue to be especially concerned with?

Re: Liquidate Holdings for Downpayment

Posted: Mon Dec 09, 2019 10:32 am
by runner23
B3GINN3R wrote: Mon Dec 09, 2019 10:29 am
dm200 wrote: Mon Dec 09, 2019 10:25 am
B3GINN3R wrote: Mon Dec 09, 2019 10:19 am Looking into buying a home now. DW and I are 27 years old. As background, HHI is about 290k and expected to go up to around 300-400 within the next couple years (obviously things happen so who knows). We currently live in a 2bd/1.5ba in a HCOL city and would like to stay in the city, but want a 3 or 4 bedroom. I work from home often etc.
Overview of current amounts:
40k cash
95k non-taxable
95k taxable (could liquidate)
We are looking at houses in the 650-750k range. Does this seem way to high? I know its high, but am willing to cut costs on other things (restaurants, cars, etc) to make wife/future baby comfortable.
We have no other debt. We currently pay 3k/mo in rent and will otherwise stay in our location, for comparison purposes. Rent for a 3dr or 4 br would be around 4000-5000 in the location we are in now (which seems insane), and we are not thrilled with the concept of going out to the burbs.
Thanks in advance for any thoughts!
I would look for a low/no down payment mortgage - and keep your investments - you have no other debt.

Your working from home is one reason for a slightly larger house. It looks to me that you can afford such a house - especially since you have no other debt and, it seems, can live modestly if you need to. Keep the savings/investments - one reason is to cover unexpected expenses that may pop us and/or some loss of income. You seem to have the time to look for a house that meets your needs/wants and is a good fit for you.
Thanks! My concern on that would be PMI. Is that an issue to be especially concerned with?
Even if you used 100% of cash and taxable investments, you would not have enough to avoid PMI on a $700k house. I would wait 2 years until you have another $100k in taxable and about another $100k in tax deferred.

Re: Liquidate Holdings for Downpayment

Posted: Mon Dec 09, 2019 10:41 am
by dm200
Yes - paying PMI can be a significant financial issue! I believe, as well, today it is much more difficult to remove PMI once you have it.

However, I see many credit unions advertising heavily low/no down payment mortgages that claim "No PMI Required". I would, then, check with credit unions about such mortgages.

Re: Liquidate Holdings for Downpayment (now having lease terminated)

Posted: Wed Jan 29, 2020 10:14 pm
by B3GINN3R
runner23 wrote: Mon Dec 09, 2019 10:32 am
B3GINN3R wrote: Mon Dec 09, 2019 10:29 am
dm200 wrote: Mon Dec 09, 2019 10:25 am
B3GINN3R wrote: Mon Dec 09, 2019 10:19 am Looking into buying a home now. DW and I are 27 years old. As background, HHI is about 290k and expected to go up to around 300-400 within the next couple years (obviously things happen so who knows). We currently live in a 2bd/1.5ba in a HCOL city and would like to stay in the city, but want a 3 or 4 bedroom. I work from home often etc.
Overview of current amounts:
40k cash
95k non-taxable
95k taxable (could liquidate)
We are looking at houses in the 650-750k range. Does this seem way to high? I know its high, but am willing to cut costs on other things (restaurants, cars, etc) to make wife/future baby comfortable.
We have no other debt. We currently pay 3k/mo in rent and will otherwise stay in our location, for comparison purposes. Rent for a 3dr or 4 br would be around 4000-5000 in the location we are in now (which seems insane), and we are not thrilled with the concept of going out to the burbs.
Thanks in advance for any thoughts!
I would look for a low/no down payment mortgage - and keep your investments - you have no other debt.

Your working from home is one reason for a slightly larger house. It looks to me that you can afford such a house - especially since you have no other debt and, it seems, can live modestly if you need to. Keep the savings/investments - one reason is to cover unexpected expenses that may pop us and/or some loss of income. You seem to have the time to look for a house that meets your needs/wants and is a good fit for you.
Thanks! My concern on that would be PMI. Is that an issue to be especially concerned with?
Even if you used 100% of cash and taxable investments, you would not have enough to avoid PMI on a $700k house. I would wait 2 years until you have another $100k in taxable and about another $100k in tax deferred.
We ended up deciding to follow this advice and save up a little more! but then we just got a notice from our landlord that he was terminating our lease in 3 months (in accordance with all laws)! :( Now, it seems like our decision is being made for us a little. We basically have two options, rent a very similar place to where we currently are (rent around 3k/mo) (but we would have to pay for moving expenses we hate moving) and then move again in a year into a purchased home.

Alternatively, we are looking at some places for 5-600 (less than originally anticipated) and just buy now. We think we could find a place we could be happy in for 5-7 years if we spend 600. 500k probably gets us a place for 3-5 years, could probably stretch it out if needed.

Interested in the wisdom of the crowds here in whether we should move for a year and then buy, or just lower our price a little and then buy. I would look into low down payment mortgages and i got a nice bonus, so I can still put like 80k down.

Re: Liquidate Holdings for Downpayment

Posted: Thu Jan 30, 2020 7:42 am
by Trism
Consider the quality of the public schools (or the cost of private education) if you plan to have children and keep a home in an urban area long-term.

We don't have (or want) children, but where we live I'm astonished by the school ratings on pretty much all of the real estate listings I see in even the most affluent parts of our city center.

Re: Liquidate Holdings for Downpayment

Posted: Thu Jan 30, 2020 3:19 pm
by B3GINN3R
Trism wrote: Thu Jan 30, 2020 7:42 am Consider the quality of the public schools (or the cost of private education) if you plan to have children and keep a home in an urban area long-term.

We don't have (or want) children, but where we live I'm astonished by the school ratings on pretty much all of the real estate listings I see in even the most affluent parts of our city center.
Good point. Definitely going to do this!