Down Payment Strategy for Primary Home
Down Payment Strategy for Primary Home
Hi everyone,
Looking to buy a home with my soon-to-be wife in 2021. I am researching how to safeguard a down payment for a home in the $600k-$700k range.
Currently, I have $135k in a taxable account consisting of VTI and VXUS with $35k in unrealized gains.
I spoke with an advisor at Fidelity who advised me to take those gains now and park the cash in money market funds and CD ladders, but I wanted to check in to get advice before I take any non-reversible actions. I am currently located in CA, but looking to move to TX later this year and buy the home in 2021.
Thanks for your help!
Info:
My Income: $200k
Fiance's Current Income: $0 (founding a startup)
Planning to MFJ in 2020
Assets:
$500k single-family investment property (Purchase price $300k with VA loan)
Taxable: $135k with $35k unrealized gains (100% equity)
Roth IRA: $130k 90% equity allocation in index funds
401k: $160k 90% equity allocation in index funds
Cash: $40k (high due to saving for wedding expenses)
Location Now: CA
Location late in 2020: TX
edit: Fixed a word
Looking to buy a home with my soon-to-be wife in 2021. I am researching how to safeguard a down payment for a home in the $600k-$700k range.
Currently, I have $135k in a taxable account consisting of VTI and VXUS with $35k in unrealized gains.
I spoke with an advisor at Fidelity who advised me to take those gains now and park the cash in money market funds and CD ladders, but I wanted to check in to get advice before I take any non-reversible actions. I am currently located in CA, but looking to move to TX later this year and buy the home in 2021.
Thanks for your help!
Info:
My Income: $200k
Fiance's Current Income: $0 (founding a startup)
Planning to MFJ in 2020
Assets:
$500k single-family investment property (Purchase price $300k with VA loan)
Taxable: $135k with $35k unrealized gains (100% equity)
Roth IRA: $130k 90% equity allocation in index funds
401k: $160k 90% equity allocation in index funds
Cash: $40k (high due to saving for wedding expenses)
Location Now: CA
Location late in 2020: TX
edit: Fixed a word
Re: Down Payment Strategy for Primary Home
Also wanted to ask if a trailing stop loss would be appropriate in this situation.
- cheese_breath
- Posts: 11786
- Joined: Wed Sep 14, 2011 7:08 pm
Re: Down Payment Strategy for Primary Home
You're making this way too complicated. How much do you want to pay down? Put that amount in FDIC insured savings and or CDs. Take it out in 2021 and get your house. Best wishes.
The surest way to know the future is when it becomes the past.
Re: Down Payment Strategy for Primary Home
I agree with Fidelity. Money needed is less than five years should not be in equities. A high yield account, CDs and similar are more appropriate. Also, you currently have a house. We’re you planning to sell that? If so, use the equity as a down payment for the new house.LAguy818 wrote: ↑Wed Jan 29, 2020 11:30 am Hi everyone,
Looking to buy a home with my soon-to-be wife in 2021. I am researching how to safeguard a down payment for a home in the $600k-$700k range.
Currently, I have $135k in a taxable account consisting of VTI and VXUS with $35k in unrealized gains.
I spoke with an advisor at Fidelity who advised me to take those gains now and park the cash in money market funds and CD ladders, but I wanted to check in to get advice before I take any non-reversible actions. I am currently located in CA, but looking to move to TX later this year and buy the home in 2021.
Thanks for your help!
You didn’t ask this, but if you’re not familiar with Texas, it might be better to rent instead of buying a house, so you can get familiar with the area.
"I started with nothing and I still have most of it left."
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Re: Down Payment Strategy for Primary Home
Sell your aft-tax 135k now. It is still a paper value until you sell. Next year who know the 135k will become what. sell all of them and put in a CD. Done.
Re: Down Payment Strategy for Primary Home
Thanks for the concurrence. Do you think it would be worth it to use a trailing stop or should I just go ahead and sell everything?WhiteMaxima wrote: ↑Wed Jan 29, 2020 12:11 pm Sell your aft-tax 135k now. It is still a paper value until you sell. Next year who know the 135k will become what. sell all of them and put in a CD. Done.
Re: Down Payment Strategy for Primary Home
Ha, thanks. That's the plan so we can be in the area for house hunting, but also my fiance is from Texas and she used to live in the area we are moving too.
edit: clarification
Last edited by LAguy818 on Wed Jan 29, 2020 12:18 pm, edited 2 times in total.
Re: Down Payment Strategy for Primary Home
That’s awesome. Congratulations and good to both of you...
"I started with nothing and I still have most of it left."
- cheese_breath
- Posts: 11786
- Joined: Wed Sep 14, 2011 7:08 pm
Re: Down Payment Strategy for Primary Home
Didn't he just say sell it now? And to repeat myself, you're making this way too complicated. Sell it today.LAguy818 wrote: ↑Wed Jan 29, 2020 12:15 pmThanks for the concurrence. Do you think it would be worth it to use a trailing stop or should I just go ahead and sell everything?WhiteMaxima wrote: ↑Wed Jan 29, 2020 12:11 pm Sell your aft-tax 135k now. It is still a paper value until you sell. Next year who know the 135k will become what. sell all of them and put in a CD. Done.
The surest way to know the future is when it becomes the past.
Re: Down Payment Strategy for Primary Home
Understood and thanks for your help. Going to take care of it before market closecheese_breath wrote: ↑Wed Jan 29, 2020 12:28 pmDidn't he just say sell it now? And to repeat myself, you're making this way too complicated. Sell it today.LAguy818 wrote: ↑Wed Jan 29, 2020 12:15 pmThanks for the concurrence. Do you think it would be worth it to use a trailing stop or should I just go ahead and sell everything?WhiteMaxima wrote: ↑Wed Jan 29, 2020 12:11 pm Sell your aft-tax 135k now. It is still a paper value until you sell. Next year who know the 135k will become what. sell all of them and put in a CD. Done.
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Re: Down Payment Strategy for Primary Home
good plan here. You could see if you have any losses to sell to balance the gains. You could also look to sell come now and then Jan 2021 to split the CG between 2 tax years.WhiteMaxima wrote: ↑Wed Jan 29, 2020 12:11 pm Sell your aft-tax 135k now. It is still a paper value until you sell. Next year who know the 135k will become what. sell all of them and put in a CD. Done.
Don't let your outflow exceed your income or your upkeep will be your downfall.
Re: Down Payment Strategy for Primary Home
If you want to remove market risk, you should heed this adviser's advice.LAguy818 wrote: ↑Wed Jan 29, 2020 11:30 am Looking to buy a home with my soon-to-be wife in 2021. I am researching how to safeguard a down payment for a home in the $600k-$700k range.
Currently, I have $135k in a taxable account consisting of VTI and VXUS with $35k in unrealized gains.
I spoke with an advisor at Fidelity who advised me to take those gains now and park the cash in money market funds and CD ladders
This isn't just my wallet. It's an organizer, a memory and an old friend.
- cheese_breath
- Posts: 11786
- Joined: Wed Sep 14, 2011 7:08 pm
Re: Down Payment Strategy for Primary Home
And if the gains have turned into loses before next January???soccerrules wrote: ↑Wed Jan 29, 2020 12:36 pmgood plan here. You could see if you have any losses to sell to balance the gains. You could also look to sell come now and then Jan 2021 to split the CG between 2 tax years.WhiteMaxima wrote: ↑Wed Jan 29, 2020 12:11 pm Sell your aft-tax 135k now. It is still a paper value until you sell. Next year who know the 135k will become what. sell all of them and put in a CD. Done.
The surest way to know the future is when it becomes the past.
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- Posts: 1380
- Joined: Mon Nov 14, 2016 3:01 pm
Re: Down Payment Strategy for Primary Home
sure - or if there are more gains?cheese_breath wrote: ↑Wed Jan 29, 2020 12:50 pmAnd if the gains have turned into loses before next January???soccerrules wrote: ↑Wed Jan 29, 2020 12:36 pmgood plan here. You could see if you have any losses to sell to balance the gains. You could also look to sell come now and then Jan 2021 to split the CG between 2 tax years.WhiteMaxima wrote: ↑Wed Jan 29, 2020 12:11 pm Sell your aft-tax 135k now. It is still a paper value until you sell. Next year who know the 135k will become what. sell all of them and put in a CD. Done.
I would likely go ahead and take the gains off the table now since there is a short time frame before needing to use the funds.
Otherwise I would rebalance to my AA if I had hit a threshold.
Don't let your outflow exceed your income or your upkeep will be your downfall.
Re: Down Payment Strategy for Primary Home
Whelp, gains are officially off the table. Thanks again everyone