Holding $95k in cash

[JJ-]

Gah. I knew this would happen. We got a small windfall and it brought us up to our targeted savings amount for a down payment but a few life changes and low rent don't make buying desirable right now. It is the right call to hold this in cash until we make a decision on buying a house over the next year, right?

[Schaefer Light]

If you're going to need to access it within the next year, then I think that makes sense.  I'd probably just look for a savings account with a decent interest rate.

[rubybeth]

Best savings interest rates right now are with Ally and Capital One 360 savings accounts. When you are actually looking to buy, you'll be able to show how much cash on hand you have, and that will make things easier for pre-approval and making offers.

[ohsnap]

Purepoint has a 1.6% rate right now, and it will rise with anticipated rate changes this year.  So even though you're holding it in "cash", make sure it's working for you.

[boarder42]

why would your situation on rental prices change in the next year - if it doesnt make sense now why will it make sense later- if you're going to buy you can never buy too soon esp. in the current rate increasing environment - if rates drop you can always REFI but you cant go back to july 2016 and get a 3.25% fixed rate 30 year mortgage.  rates are pushing 5% if you're going to buy i'd be moving faster vs slower - if you're going to rent then you should just keep renting.

[JJ-]

Financially, you're right, boarder. We have a 4 month old, my wife doesn't know if she wants to do full time work or not anymore, and I have a recent injury that keeps triggering and prevents me from doing much. I am headed to surgery in March.

I was really pushing over the last two years to close 2 months before the end of this lease term (end of August), but given what's sort of up in the air, I am leaning punt for this term and go maybe six months or another year. The rate is low for what we are getting, but what we are getting isn't quite enough anymore.

The cash is in Ally savings at 1.5% or whatever.

[alanB]

$95K is a 20% down payment? So are we talking about a ~$475,000 price range?  If interest rates go up to 5% by the time you go to buy as boarder42 suggested - definitely seems possible - you could be paying >$1500 in interest per month off the bat.  Yikes!  How low is this "low" rent? 

On the other hand, if interest rates stay low, you might even be able to get an equally good rate on 10-15% down with minimal PMI.  If you are comfortable with that, you could invest a good portion of your cash now.  Even more if you expect to accrue more cash before closing in 6 months - 1year+.  Just be realistic on closing costs and other expenses!

[JJ-]

Max I am willing to pay on two full time salaries is 450, trying to stay at 375-400. The extra is cushion, so closing costs and other miscellaneous expenses have some cover in that account.

Low rent is $1500 for a 2b/1ba house in urban Denver, market rate $2600 or so. We want a bit more space for a home office and at least another half bath.

You all have convinced me to keep buying on the table for this year. Thanks.

[HSBW]

One avenue to consider is opening a few different bank accounts in pursuit of the account opening bonuses. It is a little bit of extra work but it yields better return than the standard ~1.5% you'd get from an online savings account.

[clarkfan1979]

why would your situation on rental prices change in the next year - if it doesnt make sense now why will it make sense later- if you're going to buy you can never buy too soon esp. in the current rate increasing environment - if rates drop you can always REFI but you cant go back to july 2016 and get a 3.25% fixed rate 30 year mortgage.  rates are pushing 5% if you're going to buy i'd be moving faster vs slower - if you're going to rent then you should just keep renting.

I have 170k in cash right now because I'm looking at buying a house in the 500K range.

If mortgage rates increase other buyers will get scared and I will have less competition when I make an offer. 

[JJ-]

I have 170k in cash right now because I'm looking at buying a house in the 500K range.

If mortgage rates increase other buyers will get scared and I will have less competition when I make an offer.

Hm, touché.

[I'm a red panda]

We have recently opened Discover savings accounts.  The interest rate is 1.4%, and if you search for a code it is a $200 initial bonus with a $25k deposit. Both my husband and I opened one to take advantage of the sign up bonus.

[Dicey]

I have 170k in cash right now because I'm looking at buying a house in the 500K range.

If mortgage rates increase other buyers will get scared and I will have less competition when I make an offer.

Hm, touché.

Took that thought right out of my head.

[boarder42]

I have 170k in cash right now because I'm looking at buying a house in the 500K range.

If mortgage rates increase other buyers will get scared and I will have less competition when I make an offer.

Hm, touché.

Took that thought right out of my head.

in the rent vs buy calculation rates should play a roll in this regardless of if you can pay all cash for a house - i think there are very rare circumstances in which one comes out ahead paying 500k for a house lump sum the equivalent in rent would have to be 35-50k per year to make this a reasonable lump sum purchase.  which would raise the question - at what level do mortgage rates make owning a home much less cost effective than renting - if we pull emotion out of the equation.  this is very location specific obviously.  but i'm pretty sure hawaii is high on the best places to rent list.  Most HCOL places are.