ST Alpha - "So, had a meeting with our financial guy about moving. He had an interesting view on the process which was basically: "put minimum down on house, " (Reading a Post)

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So, had a meeting with our financial guy about moving. He had an interesting view on the process which was basically: "put minimum down on house,

Posted by oblique (aka kkuphal) Mar 3 '22, 12:05

invest proceeds"

So instead of putting say $150k of equity from our home say into the new mortgage, he'd rather we put $10k down and invest $140k in some kind of "liquid" vehicle like a brokerage account and then, if needed, we can always tap into the earnings on that for cash (say it is doing 5% / $7k/yr) even though we will have a larger mortgage payment compared to today. Borrowing for a mortgage is cheap and deductible and we will, presumably, do better having the cash invested elsewhere than tied up into the home.

Responses:

I’ve been kicking myself repeatedly for not taking more (read: any) cash out when we refied just over a year ago. -- (edited) - znufrii Mar 3, 12:24 1
- see? even this yahoo can get a lower rate than I can! -- nm - amanda jeans Mar 3, 12:31
House interest rates will rise though - you will be paying higher interest on a large chunk of money. -- nm - Andie Mar 3, 12:08 15
- Well, I think the argument there is we are locking into 30 years at whatever the rate is now -- nm - oblique Mar 3, 12:08 14
  - (remember in canada you can't lock for 30 like we can here.) -- nm - amanda jeans Mar 3, 12:11 13
    - Even then, you'd have to expect sustained double digit interest rates to make a huge deposit more attractive than investments. - Max Mar 3, 12:16 3
      - I think most money dudes assume 7% return in market these days. (note that I am not a money dude.) -- nm - amanda jeans Mar 3, 12:19 2
        
        Investing in diversified stocks over the long term, that sounds about right. -- (edited) - znufrii Mar 3, 12:35 1
        
        pork bellies -- nm - decline Mar 3, 12:36
    - and we also can't deduct mortgage interest on our taxes -- nm - Beaker Mar 3, 12:13 8
      - so true - our interest rates are much lower though for mortgages. We pay 2.19% but are only locked for 5 years. -- nm - Andie Mar 3, 12:15 3
        
        I'm just under 2.7% (13 years left on a 15). people were getting 2% on 15s when I refied but I couldn't get funded at 2% beacuse - amanda jeans Mar 3, 12:18 1
        
        nice! -- nm - Andie Mar 3, 12:25
        
        you get healthcare and unlimited poutine! -- nm - ty97 Mar 3, 12:16
      - I'm not sure if you can still deduct mortgage interest AND state/local taxes here or if you have to choose one vs the other. -- nm - ty97 Mar 3, 12:14 2
        
        I think it's a combined maximum of $10k/year. It doesn't go very far. -- nm - pmb Mar 3, 12:23 1
        
        I wasn't sure if you could combine or had to choose either/or but yeah I know it doesn't go far -- nm - ty97 Mar 3, 12:26
      - for smaller mortgages, we can't either anymore. -- nm - amanda jeans Mar 3, 12:14
All other things being equal (i.e. same interest rate regardless of down payment), I see the argument. - ty97 Mar 3, 12:07 1
- Yep, used to be you could pay 3% on a car loan and make 5% on a CD. Gone are the days :/ -- nm - Meg Mar 3, 12:15
And just think of the flashy car you can buy with 140K !! -- nm - decline Mar 3, 12:06 2
- it has to be a sedan! -- nm - amanda jeans Mar 3, 12:07 1
  - :) I still need to see the polestar in person -- nm - oblique Mar 3, 12:08
my money guys want me to HELOC my new bathroom rather than paying cash for the same reasons. as a finance professional, I know that aversion - amanda jeans Mar 3, 12:06
Sounds like good advice. -- nm - budice Mar 3, 12:06 7
- This is why we have this guy. It never really occurre to me to do things that way. My brain is always focused on day to day cash flow and all of our - oblique Mar 3, 12:08 6
  - aren't you at retirement age now? - decline Mar 3, 12:09 5
    - Just turned 50 - oblique Mar 3, 12:09 4
      - Get your singles vaccine!!!!! -- nm - ty97 Mar 3, 12:13 3
        
        He did - he got MARRIED -- nm - St. Epiphany Mar 3, 12:20 1
        
        Ha, marriage has been shown to be only 50% effective in preventing singles -- nm - zeitgeist Mar 3, 15:19
        
        been there, done that! :) -- nm - oblique Mar 3, 12:14

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So, had a meeting with our financial guy about moving. He had an interesting view on the process which was basically: "put minimum down on house,

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