I’ve been debt-free for well over a decade, and I’ve worked hard to save for a new home. All of my surplus cash goes straight to my taxable brokerage account investments. However, I’m finding it difficult to wrap my head around taking on a mortgage for a new home, even though my current neighborhood has deteriorated significantly and this is what I've been saving for. Over the past few years, my neighborhood has become extremely unsafe, loud, and crime ridden, with many homes turning into low income rentals as I have seen a mass exodus of great neighbors. Looking for your thoughts on selling out of my brokerage account ($800k) to pay the monthly mortgage on a new home in a safe area.
I feel I am still so far behind on my retirement accts.
Here’s some background:
•Age: 45, single-income household.
•Current home: Owned outright for 25+ years, expected sale proceeds: ~$275k. (Purchased home when I was 20)
•New home: ~$675k in a safer area and closer to my parents, so I can help them.
•Estimated mortgage: ~$400k / $3.7k month
Financial Situation:
•Income: $140k/year (Take-home $6.5k/month with 3% annual raises but job stability is questionable due to likely AI disruption within 5 years. This is after maxing all retirement accounts)
•Future Monthly expenses: ~$8.5k (Short $2k month. Plan to sell on a monthly basis from taxable brokerage savings to cover this.)
•Current Taxable brokerage account: $800k (cost basis $220k).
•Current Retirement savings: ~$500k (401k: $200k, Traditional IRA: $120k, Roth IRA: $120k, HSA: $60k).
•Other assets: No debt, credit score 835+, new vehicle fully paid for.
Concerns:
1.I’m nervous about taking on debt, even for a mortgage that I only plan to hold 5-7 years.
2.While I could sell the brokerage account positions to pay cash for the home, I’d prefer to sell shares gradually to cover the mortgage until it no longer makes sense to keep a mortgage. Or if we begin to have a downturn in the market then I would sell accordingly. I assume a mortgage rate would be ~6% and I’m currently earning far greater than this on my investments. I’ll refi as rates come down.
3.In 5 -7 years, I plan to sell the majority of my brokerage investments to pay off the house to be debt free again.
Question:
This is what I’ve been saving/investing for, but I’m mentally not prepared to have debt. I'm sure some of you can relate with me here. Selling ~$24k/year out of my brokerage for 5-7 years to cover the payments, then selling enough to pay off mortgage at once. Or maybe also selling ~$100k annually and apply that to principal over the next few years to quickly pay off the mortgage and cover LTCG taxes.
Am I on the right track with this plan? Will I be financially secure enough to handle a mortgage while meeting my retirement goals? What am I not thinking of?
I’m open to advice on my plan to sell from my taxable brokerage to cover expenses for the next few years.
I feel I am still so far behind on my retirement accts.
Here’s some background:
•Age: 45, single-income household.
•Current home: Owned outright for 25+ years, expected sale proceeds: ~$275k. (Purchased home when I was 20)
•New home: ~$675k in a safer area and closer to my parents, so I can help them.
•Estimated mortgage: ~$400k / $3.7k month
Financial Situation:
•Income: $140k/year (Take-home $6.5k/month with 3% annual raises but job stability is questionable due to likely AI disruption within 5 years. This is after maxing all retirement accounts)
•Future Monthly expenses: ~$8.5k (Short $2k month. Plan to sell on a monthly basis from taxable brokerage savings to cover this.)
•Current Taxable brokerage account: $800k (cost basis $220k).
•Current Retirement savings: ~$500k (401k: $200k, Traditional IRA: $120k, Roth IRA: $120k, HSA: $60k).
•Other assets: No debt, credit score 835+, new vehicle fully paid for.
Concerns:
1.I’m nervous about taking on debt, even for a mortgage that I only plan to hold 5-7 years.
2.While I could sell the brokerage account positions to pay cash for the home, I’d prefer to sell shares gradually to cover the mortgage until it no longer makes sense to keep a mortgage. Or if we begin to have a downturn in the market then I would sell accordingly. I assume a mortgage rate would be ~6% and I’m currently earning far greater than this on my investments. I’ll refi as rates come down.
3.In 5 -7 years, I plan to sell the majority of my brokerage investments to pay off the house to be debt free again.
Question:
This is what I’ve been saving/investing for, but I’m mentally not prepared to have debt. I'm sure some of you can relate with me here. Selling ~$24k/year out of my brokerage for 5-7 years to cover the payments, then selling enough to pay off mortgage at once. Or maybe also selling ~$100k annually and apply that to principal over the next few years to quickly pay off the mortgage and cover LTCG taxes.
Am I on the right track with this plan? Will I be financially secure enough to handle a mortgage while meeting my retirement goals? What am I not thinking of?
I’m open to advice on my plan to sell from my taxable brokerage to cover expenses for the next few years.
Statistics: Posted by Gash — Mon Jan 13, 2025 5:58 pm — Replies 0 — Views 8