Financing Home Purchase
Hi Terry,
I’m 64, single and retired and want to buy a new townhouse with cash for 304K.
I want to do this with the least tax bite as possible.
I have 813K in a rollover IRA, 662K in taxable no load mutual funds, 200K in a Roth IRA and 270K in a money market account. There’s also 66K in govt bonds: 44K in double EE maturing next year and 22K in I Bonds, earning 3%.
If I used the 270 money market cash, it would leave no cash cushion, which makes me uncomfortable. For example, I like to have a years worth of expenses (35K) set aside.
I’m not sure what’s the best way to accomplish this. Maybe I should lower the house price range. I’d appreciate your thoughts. Thank you.
Ron
Terry Says
Well, this is an interesting puzzle. But it seems you left some pieces out.
First, WHY do you want to buy now? I’m assuming you found a place you just love!
If not, and if you are in Illinois, I suggest you take a larger view. Do you still want to live in Illinois — especially if taxes rise, especially if (as has been mentioned) in the crunch they decide to tax retirement income and SS of residents?? I ask, because many of the posts on my blog are from people who hear me on radio in Illionis — and I truly think these risks are on the horizon.
Second, why are you so dead set on paying cash. Today’s mortgage rates for 30-year fixed rate mortgages are below 3%. Now, you may not have enough income to qualify for a mortgage, but I’m betting you could get a loan if you put down 40% in cash, and borrowed the rest.
Contact Leslie Struthers (Leslie@rate.com) to see if you can get pre-qualified for a loan.
Yes, you may not live long enough to pay it off, but who cares?! At your death, assuming no heirs, the property will be sold and remaining value after mortgage is paid off will be distributed per your will. And the mortgage would give you flexibility to use only a portion of your money market cash.
Without knowing the cost basis of your other stocks, your total assets, your retirement spending needs,I can’t give you more specific advice. But consider a fIDUCIARY financial planner through Wealthramp.com.
