Author Topic: Help me find a home for my libreated home equity  (Read 2075 times)

Goldy

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Help me find a home for my libreated home equity
« on: March 22, 2016, 08:39:27 PM »
So the Mrs and I are being relocated cross country so we are going to be selling our current house soon and expect to come out with about 225k - 250k in equity.  The new house will be a slight downsize for us so we are planning to put 20% down on a 275k house and morgage the rest on a 5/1 arm.  Here are my other finacial detials

Ages 31/32
Combined income - 205k
Cash - 50k (earning 1%)
Roths - 160k  (S&P 500 vanguard fund)
401ks - 450k  (mostly retirement date fund, both maxing this out every year)
taxable - 120k  (split between vanguard, company stock, EE bonds, lending club)

Debt
Student loans 2.6k (0.07% interest)
Mortgage ~200k @ ~2.5%

So, what would you do with the equity?  I am leaning towards just putting it in our vanguard taxable accounts to help us race to FI but I do worry about being too heavy in the stock market.  Paying additional down on the house is also slightly tempting to reduce our monthly expeses but at such a low interest rate I'm not too keen on that idea yet.  Our job security is not great so there is always the risk of losing our jobs but since they are moving us across country I think we are good for 2 years.  We may drop down to one income if we start having kids so there is that.  Right now our income is split 50/50.

Also, would you dump the entire wad in the market or DCA over a few months?




mxt0133

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Re: Help me find a home for my libreated home equity
« Reply #1 on: March 22, 2016, 08:57:38 PM »
In your financial position I would say it won't matter much in the grand scheme of things if you do a lump sum or DCA.  I would say whatever helps you sleep better at night.  If you feel the market is expensive then DCA if not then go all in.  Or invest in a REIT if you feel you are over exposed in equities.

That student loan is comical at that amount and interest rate.  I would be tempted to just pay it off so it is one less item to track.

At your income and stash size, are you almost FI with the home equity seems like you are around 1M, what are your current monthly expenses?  If they are around 50-60K then one part-time job and both of you are FI.

Heckler

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Re: Help me find a home for my libreated home equity
« Reply #2 on: March 23, 2016, 12:07:25 AM »
No kidding about the student loan - if you won't pay it off for yourself, I hope you consider paying off a friends student loan just to help them out of debt. 

Goldy

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Re: Help me find a home for my libreated home equity
« Reply #3 on: March 23, 2016, 07:04:28 AM »
In your financial position I would say it won't matter much in the grand scheme of things if you do a lump sum or DCA.  I would say whatever helps you sleep better at night.  If you feel the market is expensive then DCA if not then go all in.  Or invest in a REIT if you feel you are over exposed in equities.

That student loan is comical at that amount and interest rate.  I would be tempted to just pay it off so it is one less item to track.

At your income and stash size, are you almost FI with the home equity seems like you are around 1M, what are your current monthly expenses?  If they are around 50-60K then one part-time job and both of you are FI.

Good idea with the REIT, I have never looked into those but that would be a good way to diversify a bit.

Our current expenses are around 100k but this includes post tax investing and prepaying the mortgage.  If we nixed both of those things and had a paid off mortgage we would be in the 60k range and with some focus we could probably bring that down closer to 50k.  I'd like to keep working as hard as I can towards FI while we have good jobs instead of going part time and coasting into FI.  I had been assuming I needed 2.4m but I guess I need to revisit those numbers.

Goldy

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Re: Help me find a home for my libreated home equity
« Reply #4 on: March 23, 2016, 07:11:28 AM »
No kidding about the student loan - if you won't pay it off for yourself, I hope you consider paying off a friends student loan just to help them out of debt.

I'm making more money by not paying off the mortgage thanks to my 1% interest rate so I have been planning to let these loans just run their course.  The monthly payment is 150 and in a year it will drop to 60 for another 18mo.

As for paying off a friends loan, I'm not opposed to it but I would worry about it changing things.  If they came to me and needed money then sure, here you go and don't pay it back.  However, I don't think they know I have money because we live simply and drive older cars.  I just upgraded from a 1993 to a 2002 car.

SwordGuy

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Re: Help me find a home for my libreated home equity
« Reply #5 on: March 23, 2016, 04:38:55 PM »
That $200,000 would fully pay for and repair up 4 rental homes bringing in approx $4800 each with an after-repair value of $80,000 each (assuming you did a fair bit of the repair work) in my neck of the woods.   

Or, with leverage, it could purchase 6 to 8 properties at 25% down, depending upon the repairs needed.