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Hello,
My family is moving in a year. Our current house is paid off, and we should have no trouble selling it when we move.
A similar house at the new place costs more. Should we stop our retirement and college investing for a year to save cash for the new house,
or get a small mortgage and pay it off quickly? Thanks for your input.

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Hard to say without knowing more about your situation but in general I would say take out a small mortgage for the difference since rates are so low. Than you can pay it off as fast as you want without stopping retirement contributions.

You may have relatively significant costs (compared to loan value) associated with obtaining a small mortgage, it may make more sense to just save cash.

Another option if you have some money in your retirement account is to take a loan from it. For a house you can borrow up to 50% of its balance or $50000 max.

Opps wrong post

Heloc on the old house till it sells.

gloriousfifty said:   Should we stop our retirement and college investing for a year to save cash for the new house,
or get a small mortgage and pay it off quickly?
You left out a few options. Personally, I'd get a big fat mortgage and pay it off slowly.

I agree weith dcwilbur, I'd get a 15 Year fixed w/ a 2.5% rate for 80% of the purchase price. 2.5% w/ tax deductions IMO is a great hedge against inflation.

ironfist99 said:   I agree weith dcwilbur, I'd get a 15 Year fixed w/ a 2.5% rate for 80% of the purchase price. 2.5% w/ tax deductions IMO is a great hedge against inflation.

Agree, x1000. Get as large a mortgage as you can (without PMI), with no additional closing costs and look for arbitrage opportunities. I would only feel differently if you were nearing retirement age and were looking at a reduction in income stream.

cheapdad00 said:   ironfist99 said:   I agree weith dcwilbur, I'd get a 15 Year fixed w/ a 2.5% rate for 80% of the purchase price. 2.5% w/ tax deductions IMO is a great hedge against inflation.

Agree, x1000. Get as large a mortgage as you can (without PMI), with no additional closing costs and look for arbitrage opportunities. I would only feel differently if you were nearing retirement age and were looking at a reduction in income stream.
Near retirement is the BEST time to lock in a long term loan. You won't ever be able to borrow that kind of money again.

Well, in my opinion, you should not stop your retirement savings at any case. Your retirement savings will safeguard the golden years of your life. Donít jeopardize it. Rather, if you meet all the required criteria of the lender, then you can take out a mortgage to buy a new property.

What is the housing market like where you're moving?

Here in Northern California, the housing market has been strong the last 3 to 4 months. I wouldn't want to wait any longer than necessary if I were a buyer.

Personally, I like dcwilbur and ironfist99's idea. But only you know your own risk tolerance and whether that would keep you up at night.

Why waste money on rent if you can afford to buy, With down payment you might have a lower morg & tax cost than it would cost to rent. You can than use any extra money to pay down mort or save for your other goals.



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