Home Buying

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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Joined: Sat Nov 24, 2007 7:56 am

Home Buying

Post by Cipro »

Dear Bogleheads,
I’m in the process of buying a new house in the middle of pandemic. We finalized P&S in late Feb and anticipate closing on April 25. At the same time, I’ve recently retired. I plan to pay for house with cash. Cash for house is parked in MM account. My portfolio (including MM) is 40/60 - it will change somewhat once I pay for house (which will rebalance me in favor of equities).

So far, my portfolio has decreased about 11% in recent downturn. Portfolio still sufficient - though not so comfortable if loss were 20%. Love house, legally bound. Sure the seller feels blessed given fact bottom falling out real estate market. I feel ok about moving forward - should I think twice?
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Joined: Sat Jul 30, 2016 8:34 am

Re: Home Buying

Post by dandinsac »

You may want to consider getting a Home Equity Line of Credit or a short duration fixed rate mortgage if you want more flexibility in the next year or two.

The line of credit would allow you to borrow for sudden expenses without tapping more of your investments.

The mortgage would be more costly, but would allow access to your full portfolio. Once the COVID situation passes, you could pay off the mortgage.
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Joined: Wed Jun 26, 2019 8:26 pm

Re: Home Buying

Post by Freetime76 »

Congratulations on retirement and cash purchase. I wouldn’t do a HELOC, as I’m assuming this cash for purchase isn’t your only money. Why go into debt?? We are nowhere near your position, I suspect, but thoughts for you:

1. If we still liked the house and we’re moving for the long term, would do the purchase and never look back. That money is spent. Done, you have a new home . :sharebeer

2. You’re right, the seller probably is relieved and very glad!...our house is for sale and the market is, shall we say, “paused”.

3. If you’re retired, then you’ve certainly seen some stuff in the market (real estate, investments, banks, bailouts, bubbles), so you know the drill: if your own household’s situation is secure, you’ll make it through okay. Your home will be paid for, so no payments there. This mess is an inconvenience, economically-speaking, not devastation and catastrophe.

If you’re worried about 20% loss, then move funds to a checking or savings account?
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Re: Home Buying

Post by toomuchRE »

Why would anyone with cash, buy a house now which was priced before this pandemic when it is guaranteed that we will see price decline??

When was the last time we had millions of people who couldn't afford mortgage ?? When was the last time govt paid for people's mortgage.. So guaranteed price decline. matter of how much %
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Re: Home Buying

Post by Cubicle »

I'm glad you love the house... but you might be able to get a better price on the same house or a different house.

"Legally bound"? Morally maybe. Practically, probably not with everything going on.

Of course the seller feels good... ought to tell you something.
"Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓
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Re: Home Buying

Post by czr »

If you love the house and could afford it and have strong emergency buffer, why not? A house isn't a financial investment but a place to live. There's value there that's not merely financial. It may go down or up in value but it won't matter monetarily until you have to sell and even then it shouldn't affect your personal financial situation.
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