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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: fizzgig on February 06, 2017, 11:37:04 AM

Title: should I do large down payment on house?
Post by: fizzgig on February 06, 2017, 11:37:04 AM

I have about 150K in index funds earning about 7% at the moment.
If I can find an affordable house around here, there are 15 yr mortgages at about 3% interest.
Does anyone think it would be worth putting 100K or more from my index funds down on a house? I would continue to add savings to the fund after the house is bought, about 20K a year, but the fund would take a big hit initially from buying a house.

Title: Re: should I do large down payment on house?
Post by: frugaliknowit on February 06, 2017, 11:54:59 AM

Congrats on the Index Fund balances!

More information, please:

Age/how far from FIRE or retirement
Marital Status or Partner, if any, contributing
Household Income (just yourself?)
Other debts, if any
Other savings, if any
Cash balances, if any

Title: Re: should I do large down payment on house?
Post by: Mrtreasuretoupee on February 06, 2017, 12:02:01 PM

I'd put enough down to avoid the PMI (around 20%) because the money is earning you more in the index fund that it will cost you in interest.

Title: Re: should I do large down payment on house?
Post by: fizzgig on February 06, 2017, 12:08:28 PM

Hi,
I'm 40 years old, I don't really expect to retire early, just putting my savings in VTSAX, I just started doing that 2 years ago.
At the moment I have a partner splitting living costs with me. I make 57K a year.
No debt, an additional 30K or so in checking or savings

Title: Re: should I do large down payment on house?
Post by: neo von retorch on February 06, 2017, 12:15:01 PM

Math says... leave your money invested. Put 20% to avoid PMI. Enjoy your low interest rate. (Even consider a 30-year despite the higher interest, since over the long-term, it lets you invest earlier with those smaller payments.)

Title: Re: should I do large down payment on house?
Post by: frugaliknowit on February 06, 2017, 01:28:54 PM

I would put 20% down, 15 year amortization (in part due to the fact that you are 40) and invest the rest.