Buying a house with job uncertainty, better to pay cash?
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Anonymous
| If you're in the market for a house and have the cash available to pay it completely off and not have a mortgage, would you? We have almost enough outside of retirement funds to buy the house we want in cash (if we liquidated brokerage and after paying capital gains taxes) but would be pretty wiped out besides our 401k and IRAs. We have high income but work in tech with constant layoffs. We are both mid 30s. |
Anonymous
| It's such a personal decision. In our case, I'd want more in cash. If I was in your place, I might leave a bit more in cash and have a smallish mortgage since the current administration is so wild and unpredictable. |
Anonymous
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You do know that you could use the money in the market to pay off the mortgage slowly, or fast, and still have all this money left?
How much are the capital gains if you took all this money out at one time? Mind the taxes, take out down-payment, and then pay the mortgage off. If having not having a house keeps you up at night, heck with taxes and building wealth. Go buy it. |
Anonymous
Not necessarily depending on how it is invested if the market tanks. |
Anonymous
| If I did this, I would want to make sure I had enough liquidity left over for emergencies. So, if you have an adequate emergency fund after you pay cash, go for it. Otherwise, get a mortgage, keep saving, and once you have enough to pay off the house with what you need for emergencies left over, pay the house off. You cannot eat your house. |
Anonymous
| If I were buying a house and I was not confident in my employment, I would keep my money out of the house. |
Anonymous
Exactly. Having access to cay if things go south is what you want. Very worst case you walk away from the house. |
Anonymous
| (Cash not cay) |
Anonymous
Don't they have access to the amount you owe if you "walk away from the house"? Can't they sue you? |
Anonymous
| Absolutely not. Keep the cash to make the payments if you have to. You can't just dump a house quickly. |
Anonymous
| Its easier to get a mortgage now than to tap into your home equity after you lose your job and have less or no income for loan application |
Anonymous
| If your job is not secure, why would you buy a new house now? |
Anonymous
Well… our jobs have never been secure. Does this mean we should never buy a house? My thinking is without a mortgage we can greatly reduce the fear that comes with a potential job loss. If we mortgage ourselves with only 20% down our total expenses are more than 10k a month. Without a mortgage we could get this down to 3-4k a month if we really had to cut back. It’s way easier to find ways to earn 3-4k than 10-15k if something happens to our jobs. |
Anonymous
Exactly, and with rates hovering near 7% that’s going to be hard to beat keeping it invested in the market. |
Anonymous
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How much could you rent the house out for today? How would the smallest house/apartment you could live in go for today?
Use as much cash to get it so that renting out the house would pay for your mortgage and your rent. Then put keep the cash in as high earning safe investment as you can get. |