Should I sell?

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Am planning on buying a $500k - $600k home later on this year. I have 20% cash saved already and will have ~$50k - $70k leftover as well for reserves, furniture, new car, etc. With no debt and a FICO of nearly 800 and ~3x household income I imagine I shouldn't need to put more down. I do, however, have another $100k sitting in a balanced fund purchased gradually over the last decade. I realized some losses on it in 2009 so it all looks like big gains but have a lot of losses left to carryover still. Compared to cost basis I'm probably up on average and for most shares but a few are underwater, again the losses having already been realized. Not that it matters anymore what I bought those shares at, should I sell it and put the funds into the house or leave it in the market? I still have another comparable chunk of money sitting in separate funds which I wasn't planning on touching as well. If I should sell, then how much and over what time period? I'm not much of a market timer clearly but the market looks pretty frothy right now, especially Europe.

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I'd put as little down as possible 3.5% FHA if possible depending on it's limit in your area

The economy is uncertain and if property prices drop just 20% on a $600k home , do you want to lose your $120k downpayment?

Now of course you may have no intention to walk, but even people who put a million dollars down are now walking away.

http://m.yahoo.com/w/news_america/u-foreclosure-crisis-beverly-hills-style-050531282.html?orig_host_hdr=news.yahoo.com&.intl=us&.lang=en-us

They sure wished they only
Put 3% down

No but I don't think I'd put my family through that kind of experience over it either. We're thinking that we'll buy a home that we're comfortable living in through retirement if need be and certainly no shorter than 10-20 years so we're aiming for a 15 or 30 year loan with advanced payments, just for peace of mind. I should probably also mention that the city we're looking to buy in is Austin, TX, where software engineering income rose 12% this year. The economy of Texas and Austin in particular is really booming and we're buying in a very desirable part of town (Northwest Hills) where people are buying at very reasonable price to income ratios today so I'm not all that concerned about a big drop there, even if interest rates rocket up. Texas housing prices are also among the most stable in the country historically. I'm currently living in Boston, though, and would definitely agree that this market is vulnerable to a drop like that.

Comes down to if you think fund can outpreform your mortgage rate(3-4% no risk) and if so are you willing to take the additional risk.

Doyou have retirement savings? is any of the money you mentioned earmarked for retirement? If the "other $100k" is part of your retirement savings, leave it alone. If that makes it difficult to buy a house, save up more cash before buying a house.

I didnt mention retirement savings and none of these funds are set aside for it. I have other funds set aside for that.

SUCKISSTAPLES said:   

Now of course you may have no intention to walk, but even people who put a million dollars down are now walking away.

http://m.yahoo.com/w/news_america/u-foreclosure-crisis-beverly-h...



Per the article, "Strategic default is an especially appealing option in California, one of only a handful of U.S. states where primary mortgages made by banks are "non-recourse" loans. That means the loan is secured solely by the property, and banks cannot go after a delinquent owner's wages or other assets if they default."

Do you happen to know which other states are part of that "handful?"

Also does that mean outside of that "handful," strategic default is a poor choice if one has outside assets that are significant relative to the property value?

balor124 said:    I should probably also mention that the city we're looking to buy in is Austin, TX, where software engineering income rose 12% this year. The economy of Texas and Austin in particular is really booming and we're buying in a very desirable part of town (Northwest Hills) where people are buying at very reasonable price to income ratios today so I'm not all that concerned about a big drop there, even if interest rates rocket up. Texas housing prices are also among the most stable in the country historically.

If you haven't already picked a house you may consider looking in the Great Hills area. Just across 360 from NW Hills but most of it is in the much better Round Rock school district. The primary schools there feed into Westwood High which is a top 10 high school in Texas and top hundred or so in the country.

If you have no kids and don't intend to, less of a concern, though school quality can prop up property values, as you probably know.

Welcome to Austin.

And yes, the economy here is smoking hot. PM me if you'd like and let me know where you're going to be working. I may be able to give you some scoop, introduce you to people, etc if you'd like.

marketingmike said:   balor124 said:    I should probably also mention that the city we're looking to buy in is Austin, TX, where software engineering income rose 12% this year. The economy of Texas and Austin in particular is really booming and we're buying in a very desirable part of town (Northwest Hills) where people are buying at very reasonable price to income ratios today so I'm not all that concerned about a big drop there, even if interest rates rocket up. Texas housing prices are also among the most stable in the country historically.

If you haven't already picked a house you may consider looking in the Great Hills area. Just across 360 from NW Hills but most of it is in the much better Round Rock school district. The primary schools there feed into Westwood High which is a top 10 high school in Texas and top hundred or so in the country.

If you have no kids and don't intend to, less of a concern, though school quality can prop up property values, as you probably know.

Welcome to Austin.


I also love Austin. Have family in Round Rock. And, loved it even more before the non-Texans "discovered" it. (I guess that's the hipster in me.)

But no place - not even Austin - can keep up at this pace. Ask all the new Austin (or round rock/pflugerville) residents from Vegas how SoCal and then Vegas felt right before the corrections.

I would be cautious.

As stated above, put as little down as possible. I sure wish I put 3.5% or even 5% down instead of 30%. I am now seriously underwater in a home that has major issues (mold)(Chinese Drywall), in a down turning area with a uncooperative lender. I am now trying to find an escape plan. I lost over 80k on all of this that I will NEVER get back. Keep in mind this was a brand new home from a MAJOR builder (Beazer)... The area was blooming when we moved here SW FL, and now we are at a loss...

Yeah will TX be the next to drop? They didn't have frothy rises either?

Texas will be a good place to live as long as oil prices remain elevated and the state is competitive enough to attract employers with low taxes. They are absorbing lots of jobs from employers who are looking to escape high tax states such as Illinois and California.

That said I would still go with the 3.5% down payment 30 year mortgage... the put option is nice and inflation will eat away at your monthly payment.



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