Downsizing home, what to do with equity

[Goldy]

It would be difficult to sell winning funds but I would only do it if the rate spikes. If it stays low then I'll keep paying monthly.

I'd invest it in some vanguard large cap fund.

[tripods68]

Thanks for all the replies everyone!

I am a little surprised at all the feedback suggesting to pay the mortgage off, maybe I need to consider that a little more seriously.

Without a mortgage payment, the $1200 monthly investment S&P earning 5% average annual return for 30 years will grow to 1 million. That's some serious consideration.

[feh]

payoff the new home.

+1000

[Jluke]

It would be difficult to sell winning funds but I would only do it if the rate spikes. If it stays low then I'll keep paying monthly.

I'd invest it in some vanguard large cap fund.

I know you've been on here a while...

Do you currently have a taxable investment account?

Have you been able to ignore the ups and downs of the stock market over the years?

[LivingAlmostLarge]

Nope I recall reading you made quite a bit so I went with mortgaging the house and you are getting a 5 year arm to boot. LOL.

Anyway that's the route I'd go to keep cash on hand until you determine what the future holds. for 2.6% interest you have flexibility to do IVF, adopt or anything else if anything goes wrong with starting a family. Of even taking time off if you have a child that needs it.

[Goldy]

I know you've been on here a while...

Do you currently have a taxable investment account?

Have you been able to ignore the ups and downs of the stock market over the years?

Ya, I have some taxable and company stock, maybe 100k total. I have no issue holding, I have a hard time selling.

[Fishindude77]

Like a few others have suggested, I'd pay off the house. This might be one of those now or never times where you have the opportunity to use a lump sum of money to erase a big pile of debt and get yourself way ahead in life.

Plus, your opportunity to save or invest for the future in the market or whatever you choose immediately becomes much better using the money that was going towards house payments monthly.

[Goldy]

Update

We sold our home in 27 hours for full asking price and will be getting a final equity check of about 274k which is enough to pay off the new mortgage and have a little left over for some renovations. My wife is pretty tempted to just cut a check and I am slowly being convinced but I might try and find some middle ground.

[Nutria]

Update

We sold our home in 27 hours for full asking price

Any guilt that you didn't ask for more???

[tripods68]

Update

We sold our home in 27 hours for full asking price and will be getting a final equity check of about 274k which is enough to pay off the new mortgage and have a little left over for some renovations. My wife is pretty tempted to just cut a check and I am slowly being convinced but I might try and find some middle ground.

Congratulations!

Cut the check....but if you don't like being debt free, you can always go back!

[Goldy]

Any guilt that you didn't ask for more???

That was my knee jerk reaction but in the end I think it sold for the right price.

[LivingAlmostLarge]

So are you going to mortgage it until you go down to 1 income?

[sv2007]

[*]a burden on your wallet to hire a property management company.[/list]

Using a management company isn't headache free.

Especially if you hire a bad one or a scammer (since OP is not going to be in town due to reloc it is even more likely). Go with a reputable company, even it they charge more.

However, even then, landlording is a pain even with tenants that pay on time because things break faster with tenants and you are responsible in fixing everything (even when the tenants misuse something because they aren't home owners). For example, I've sent an electrician to reset a fuse (yes, some tenants are first timers who knows nothing about a fuse box).

Put it into the an SP500 ETF and be done with it. Easy, clean investments that you don't have to remember to pay property tax, landlord insurance, HOA fees, or other garbage (truely garbage like trash removal, yes the city of San Jose REQUIRES landlords to pay it).

The very second thing I did after retiring is to get rid of all my rentals as tenants move out.

[Goldy]

So are you going to mortgage it until you go down to 1 income?

Ya, my current plan is to toss 25k at the loan in month 1 and pay an extra 1800/mo so that after 5 years there is only about 30k left on the loan. I'll have some company stock vesting in the next few years so I may wind up tossing a few extra payments here and there.

[Goldy]

Update

So I learned a few things about myself over the past few months. My original plan was to DCA my equity over 6 months while paying down the new mortgage but having that money just sitting in my bank account waiting to get DCA'd was driving me nuts. So I wound up putting 70k down on the new home and investing the remainder 204k over about 4 weeks. So far I'm up 21k since I invested the equity and I would have missed a lot of those gains if I had waited so long to DCA.

I'm still paying $350 extra per month to the mortgage but all the extra money is going into investments. My plan is to keep the mortgage for 5 years or until I no longer get to claim the mortgage deduction at which point I will probably just pay it off. Its a wonderful feeling knowing you can pay it off if you want to.