Grey coins for a house?
August 10, 2011 11:24 AM Subscribe
We want to come up with funds for a down payment on a house. We have many various silver coins we have been collecting over the years. Should we sell some/ all of it? Would it be worth it?
We know we can make a mortgage no problem (based on our broker/ bank) but we don't want to have to borrow from our family for the down payment.
We know we can make a mortgage no problem (based on our broker/ bank) but we don't want to have to borrow from our family for the down payment.
FWIW, my Father-In-Law, who is a big time serious coin collector, advised us recently to sell silver coins if we had any lying around. He said prices are insanely high right now. Of course, I don't have a stash of silver coins to sell, but there you go. Maybe it's useful info for you.
posted by COD at 11:30 AM on August 10, 2011
posted by COD at 11:30 AM on August 10, 2011
Silver and gold are high right now, so it could be a good time to sell.
But frankly I'm a bit surprised that a down payment is required, if you have good credit. There are so many unsold/foreclosure homes out there right now, and nobody's buying... You have quite a lot of leverage. One of my friends just signed on a 30-year note, nothing down, all costs rolled into the mortgage.
posted by xedrik at 11:32 AM on August 10, 2011 [1 favorite]
But frankly I'm a bit surprised that a down payment is required, if you have good credit. There are so many unsold/foreclosure homes out there right now, and nobody's buying... You have quite a lot of leverage. One of my friends just signed on a 30-year note, nothing down, all costs rolled into the mortgage.
posted by xedrik at 11:32 AM on August 10, 2011 [1 favorite]
Response by poster: We know their worth in melt value is around 3000-3500. Maybe more if metal value goes up by the time we sell. We are looking at an FHA Loan which requires 3.5% down with a 4.25% interest rate. Which, in the price range for homes we are looking at, puts us just about there (maybe a grand or 2 under). I don't know any home mortgages that require no money down with that low of an interest rate (but if you do then please tell us).
Sentimentality aside, would it be a worthwhile trade off? Will we regret not having the silver to fall back on?
posted by MayNicholas at 11:38 AM on August 10, 2011
Sentimentality aside, would it be a worthwhile trade off? Will we regret not having the silver to fall back on?
posted by MayNicholas at 11:38 AM on August 10, 2011
Sentimentality aside, would it be a worthwhile trade off? Will we regret not having the silver to fall back on?
There are two separate issues here:
1) Is this a good time to convert your silver into cash?
2) Would you rather have the cash or use it for a down payment?
Remember, you could (and maybe should, according to COD's Father-in-law) convert your silver to cash just because. Whether you then use that cash for a down payment is another question entirely.
If it were me: I wouldn't (ever, ever) buy a house without at least a few grand on hand for short-term repairs/renovations. But that's me. Certainly, I think (again, ignoring sentiment) this is probably a good time to turn your silver into dollars and do something with it; maybe buy a house, maybe stick it in a savings account.
posted by Tomorrowful at 11:43 AM on August 10, 2011 [4 favorites]
There are two separate issues here:
1) Is this a good time to convert your silver into cash?
2) Would you rather have the cash or use it for a down payment?
Remember, you could (and maybe should, according to COD's Father-in-law) convert your silver to cash just because. Whether you then use that cash for a down payment is another question entirely.
If it were me: I wouldn't (ever, ever) buy a house without at least a few grand on hand for short-term repairs/renovations. But that's me. Certainly, I think (again, ignoring sentiment) this is probably a good time to turn your silver into dollars and do something with it; maybe buy a house, maybe stick it in a savings account.
posted by Tomorrowful at 11:43 AM on August 10, 2011 [4 favorites]
Personally, I would keep the silver and find the money else where. With the way the economy is going right now, I have much more faith in silver than the US dollar.
Maybe you could sell a portion of it. I try to keep at least 10% of my savings/investments in gold and silver.
posted by yb2006shasta at 11:51 AM on August 10, 2011
Maybe you could sell a portion of it. I try to keep at least 10% of my savings/investments in gold and silver.
posted by yb2006shasta at 11:51 AM on August 10, 2011
One thing to bear in mind is that the capital gains on silver are taxed at a higher rate than regular capital gains, since precious metals are considered collectibles. Make sure you include that in your budget when you're figuring out how much you might get for them, and if you haven't been keeping good records of what your acquisition prices were you'll probably need to talk to an accountant to figure out what your tax liability is going to be.
posted by strangely stunted trees at 11:52 AM on August 10, 2011
posted by strangely stunted trees at 11:52 AM on August 10, 2011
would those coins converted to cash be the basis for your down payment? what other cash do you have on hand?
because this:
If it were me: I wouldn't (ever, ever) buy a house without at least a few grand on hand for short-term repairs/renovations.
posted by violetk at 11:57 AM on August 10, 2011
because this:
If it were me: I wouldn't (ever, ever) buy a house without at least a few grand on hand for short-term repairs/renovations.
posted by violetk at 11:57 AM on August 10, 2011
FHA sets pretty high standards for the houses on which they are willing to hold mortgages so you shouldn't worry too much about unexpected repairs in the near future.
posted by mareli at 11:59 AM on August 10, 2011
posted by mareli at 11:59 AM on August 10, 2011
That's wrong, resurrexit, the capital gains tax is based on the price you payed to acquire it, not the face value. It's taxed at a punitive rate, but the basis is the same as any other capital gain.
posted by strangely stunted trees at 12:15 PM on August 10, 2011 [1 favorite]
posted by strangely stunted trees at 12:15 PM on August 10, 2011 [1 favorite]
FHA sets pretty high standards for the houses on which they are willing to hold mortgages so you shouldn't worry too much about unexpected repairs in the near future.
I wouldn't bank on this. FHA gave us a mortgage on a house with a 50-year-old furnace. FHA just cared that it worked at the time we bought it. But that doesn't necessarily mean it will continue to work, and replacing a furnace is expensive. Oh, and the house also had an electrical panel that was known to fail in a very scary way that we had to replace very soon after we moved in. That was about $2500.
posted by rabbitrabbit at 12:17 PM on August 10, 2011
I wouldn't bank on this. FHA gave us a mortgage on a house with a 50-year-old furnace. FHA just cared that it worked at the time we bought it. But that doesn't necessarily mean it will continue to work, and replacing a furnace is expensive. Oh, and the house also had an electrical panel that was known to fail in a very scary way that we had to replace very soon after we moved in. That was about $2500.
posted by rabbitrabbit at 12:17 PM on August 10, 2011
From my fairly ignorant point of view, silver appears to be in a complete bubble right now. There's all kinds of weird bubble behavior going on in metals -- gold is selling for more than platinum today, which is Not Normal behavior, and silver has been shooting up radically as well.
Definitely not a time to buy, but it could be a very good time to sell, if you don't have a pressing reason to hang onto it.
posted by rmd1023 at 12:23 PM on August 10, 2011
Definitely not a time to buy, but it could be a very good time to sell, if you don't have a pressing reason to hang onto it.
posted by rmd1023 at 12:23 PM on August 10, 2011
Another thing to consider is how you're planning on handling closing costs, which aren't trivial. You have to pay for inspection and a lawyer, for example. I kind of think if you're cutting things this closely you'd be better off selling it and squirreling it away for some liquid cash, but if you're sentimental about it you could just forget that you have them and bare-knuckle it through the process.
If it were me, I wouldn't care long term because I'd be thinking about how much they weigh and having to haul them around and store them and just having the burden of their existence on me. But surely you feel differently since you've gone to the trouble to collect them this far.
How about: do you want to collect coins for the rest of your life or not? If No, sell them. If Yes, hang on to them. They took you time to collect in the first place.
posted by A Terrible Llama at 12:44 PM on August 10, 2011
If it were me, I wouldn't care long term because I'd be thinking about how much they weigh and having to haul them around and store them and just having the burden of their existence on me. But surely you feel differently since you've gone to the trouble to collect them this far.
How about: do you want to collect coins for the rest of your life or not? If No, sell them. If Yes, hang on to them. They took you time to collect in the first place.
posted by A Terrible Llama at 12:44 PM on August 10, 2011
Yeah, FHA also doesn't give a crap about things like the fence, or the water line that connects your house to the main (and home warranty doesn't cover those either).
We did some wacky financing tricks (most of which are no longer allowed) to get out without any cash. And we got through that without trouble, but I'd say in retrospect if you can't put your hands on $2K on pretty short notice without selling your stuff, you may need to hold off on purchasing a house.
You'll need money to move, too, and for all the random stuff that comes up right at first.
posted by Lyn Never at 12:46 PM on August 10, 2011
We did some wacky financing tricks (most of which are no longer allowed) to get out without any cash. And we got through that without trouble, but I'd say in retrospect if you can't put your hands on $2K on pretty short notice without selling your stuff, you may need to hold off on purchasing a house.
You'll need money to move, too, and for all the random stuff that comes up right at first.
posted by Lyn Never at 12:46 PM on August 10, 2011
Response by poster: Well as far as closing we won't purchase unless seller contributes $5000. We have an offer out right now which is really lowball, but only so we could work up to our best and final. We will most likely lose this house, and after all this stress I am very ok with calling off the hunt for a good long while and remain renters. But on the very off chance they do accept our best and final (with closing), I want to minimize what we need to ask for from my parents. If we sold off 1/2 and ate beans and rice till closing we should only need to borrow about $1500 from them. We really didn't expect to find a house we liked so much already that was (well maybe) affordable. We have seen a lot of crap homes, so we are kind of jumping at this one good one.
These have been some really great and insightful answers, although some of them I am really too dumb to fully understand.
posted by MayNicholas at 1:01 PM on August 10, 2011
These have been some really great and insightful answers, although some of them I am really too dumb to fully understand.
posted by MayNicholas at 1:01 PM on August 10, 2011
Personally, I would keep the silver and find the money else where. With the way the economy is going right now, I have much more faith in silver than the US dollar.
Unless you have a lot more than $3000 in cash sitting around (which you probably don't given this question), then hedging strategies against the dollar using physical precious metals should probably not be your top priority. Dump the equivalent into a Roth IRA and invest in whatever you want (which could include GLD or some other way to match precious metal prices) without having to worry about finding buyers and paying taxes if your goal is long term investment.
Anyway there is nothing special about your $3000 worth of silver in coins versus having $3000 in cash sitting under your mattress from a financial perspective with regards to your short term need for a down payment. If the option is selling something you have to get the money or borrowing it from your family, that is your choice to make. Overall I would say that having a family who would be willing to lend you thousands of dollars is probably a much better long term safety net than having a bunch of silver coins. Also if you don't have the cash to make a 3.5% down payment that's usually a big red flag that you probably can't actually afford a house right now. If housing prices drop 10% in a few months (which is very possible, ask anyone who has owned a house in the last 5 years or so) you are already underwater, and you may not have enough of an emergency fund to pay for big unexpected expenses like a leaky roof and still cover your mortgage. If you can save enough for a significant down payment (like 20%) it not only puts you in a better position to avoid being underwater but proves that you are financially stable enough to actually afford buying a house (no matter what your broker or bank says).
posted by burnmp3s at 1:03 PM on August 10, 2011
Unless you have a lot more than $3000 in cash sitting around (which you probably don't given this question), then hedging strategies against the dollar using physical precious metals should probably not be your top priority. Dump the equivalent into a Roth IRA and invest in whatever you want (which could include GLD or some other way to match precious metal prices) without having to worry about finding buyers and paying taxes if your goal is long term investment.
Anyway there is nothing special about your $3000 worth of silver in coins versus having $3000 in cash sitting under your mattress from a financial perspective with regards to your short term need for a down payment. If the option is selling something you have to get the money or borrowing it from your family, that is your choice to make. Overall I would say that having a family who would be willing to lend you thousands of dollars is probably a much better long term safety net than having a bunch of silver coins. Also if you don't have the cash to make a 3.5% down payment that's usually a big red flag that you probably can't actually afford a house right now. If housing prices drop 10% in a few months (which is very possible, ask anyone who has owned a house in the last 5 years or so) you are already underwater, and you may not have enough of an emergency fund to pay for big unexpected expenses like a leaky roof and still cover your mortgage. If you can save enough for a significant down payment (like 20%) it not only puts you in a better position to avoid being underwater but proves that you are financially stable enough to actually afford buying a house (no matter what your broker or bank says).
posted by burnmp3s at 1:03 PM on August 10, 2011
Response by poster: Very true. One of the main reasons we are trying to get a house now is to take advantage of the interest rates before they start heading up again. That and we want to be in a house and be able to start saving as much as possible so that in a year or so we can start trying to have a family (I'm 34 and my eggs aren't getting any fresher). We could stay here and rent and save, but by the time we have enough saved, the interest rates may have gone up to where we are in the same boat. We (personally, not the bank) are basing house much mortgage we can afford on a single income- but the truth is we have two. We are buying cheap so we can basically save all of 'my' paychecks for savings until we do start our family.
posted by MayNicholas at 1:14 PM on August 10, 2011
posted by MayNicholas at 1:14 PM on August 10, 2011
As much as interest rates are very very attractive these days, I would hold off selling your silver coins at the present time. Silver has reached a high of $50.00 twice. Last time silver challenged the $50.00 dollar level was just last April. Once it breaks this mark, the sky is the limit. I know that it is hard to wait but you will be rewarded for waiting. Why buy a house when you will be able to purchase a mansion in three years. To wait takes enormous discipline. I have been involved in silver for the last 30 years. To assist you to muster up the courage to wait, I recommend you read "Silver Profits in the Nineties." (Amazon)
posted by Mckoan1 at 2:05 PM on August 10, 2011
posted by Mckoan1 at 2:05 PM on August 10, 2011
I know little about silver coin value, but I'm surprised you're talking about melt value. wouldn't they be more valuable as coins?
posted by rtimmel at 3:17 PM on August 10, 2011
posted by rtimmel at 3:17 PM on August 10, 2011
Wait, you're telling us you want to buy a house and the only savings you have is about $3000 in junk silver? You have no emergency fund? You're considering borrowing from your parents and eating beans and rice?
What about debt? Do you have credit card debt, student loans, car loans? Even with no debt whatsoever, buying a house is not a good idea for you at this time. You need to save up some money right now, both to get in the habit of saving and to provide an emergency fund and some cushion for unexpected expenses. You should have enough savings to cover at least 6-12 months of expenses in case you or your partner loses a job. I would honestly want more than that if I was going to purchase a house.
As for the silver, you can convert some or all of it to dollars and put it into a savings account for your emergency fund.
posted by Durin's Bane at 4:20 PM on August 10, 2011
What about debt? Do you have credit card debt, student loans, car loans? Even with no debt whatsoever, buying a house is not a good idea for you at this time. You need to save up some money right now, both to get in the habit of saving and to provide an emergency fund and some cushion for unexpected expenses. You should have enough savings to cover at least 6-12 months of expenses in case you or your partner loses a job. I would honestly want more than that if I was going to purchase a house.
As for the silver, you can convert some or all of it to dollars and put it into a savings account for your emergency fund.
posted by Durin's Bane at 4:20 PM on August 10, 2011
Response by poster: Well we didn't get the house we offered on. Based on thoughts given here and personal thoughts we are going to give up the house hunt for a while and just save. We will feel much better knowing we didn't have to ask for help when it comes to the down payment. (As for the rice & beans comment- it was figurative- I happen to enjoy cook extravagant meals almost nightly which adds up fast)
Save Save Save.
posted by MayNicholas at 4:38 PM on August 10, 2011 [1 favorite]
Save Save Save.
posted by MayNicholas at 4:38 PM on August 10, 2011 [1 favorite]
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posted by Tomorrowful at 11:26 AM on August 10, 2011 [2 favorites]