Author Topic: What to do with 100,000 windfall?  (Read 2214 times)

onemorebike

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What to do with 100,000 windfall?
« on: August 09, 2014, 08:52:33 AM »
Five years ago we bought our first house, fixed it up and lived in it for a few years before moving out and renting it. Wednesday I sold it and made a healthy chunk of money on it. I'm trying to decide how to best put the money to work for me. Initially, I really liked the idea of rolling it into the next house we buy (we'll be selling our current home and moving in a year or two) to have much smaller mortgage with a big downpayment. At the same time I've read about the insanely low interest rates right now and about holding on to as much of my money as possible while using someone else's money at a low interest rate to pay down a mortgage. And on days when I'm exhausted by house chores and stuff I just want to be a renter again.

I know financially the best decision is to hold most of the money (maybe keeping 20 percent for the down payment) and invest the rest - given the likely return. But I'm also balancing with the emotional well being it would bring us to have such a low mortgage (or perhaps a low rent?) - providing us both the opportunity to scale back our hours (presuming our employers are down) and spend more time with our young children.

What would you do given these circumstances?

justajane

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Re: What to do with 100,000 windfall?
« Reply #1 on: August 11, 2014, 09:58:21 AM »
I understand your desire to have a low mortgage, which essentially functions as a hedge against job loss.

If you put all of it into the home, how many years would it take for you to be entirely mortgage free? You need to provide concrete numbers how much a home costs in your region. This will influence the advice people give you.

If the 100K would give you a super low mortgage which would enable you to prepay fairly quickly, then I recommend dropping all of it in the house. If not, hedge your bets and invest some in a new house and some in the market. But then be sure your mortgage is low enough for you to pay it on part-time wages (to spend more time with your family) or minimum wage jobs (in the event of job loss).

Hope this helps.

Cassie

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Re: What to do with 100,000 windfall?
« Reply #2 on: August 11, 2014, 03:39:01 PM »
I would like the idea of having a low mortgage so no matter what life throws at you or if you want to pursue new adventures, etc you do not have to worry about a big payment.