Buy A House With Cash
July 11, 2012 6:12 AM Subscribe
My wife and I are buying a house in Austin, Texas ( Steiner Ranch ). We are trying to figure out how we want to finance it. We have the means to pay for the house with cash. We are being offered a mortgage at 3.6%. The cost of the house would represent about 50% of our net worth. The other 50% is fairly liquid, with an even spread between 401k, index funds, 529's, and cash. Should we do it?
posted by jasondigitized to work & money (25 answers total) 3 users marked this as a favorite
We are both in our late 30's with two kids ( 2 and 4 ). I am a project manager, my wife is an accountant. The only debt we are carrying is our SUV that is 0% financed. Over the next 5 years the only major expenses we see are home improvements, e.g. landscaping, pool, etc. In the long term, the major expenses we see are college, vacations, retirement and health care.
I suppose this question is about alternative investments and whether or not we could beat 3.6% without taking on too much risk. It is also about the Austin real estate market and whether or not we would kill our leverage if we paid cash. Furthermore it has to do with any tax write offs we may be missing out on. Most importantly it is about your personal viewpoint on home ownership, finance, banking, risk, European default, market trends, etc. With the facts at hand, what would you do?
Answering this question by telling me "It all depends on what you want to do" is not a good answer. I want to put my kids through college, take a few good trips, and retire at a reasonable age. We live frugally, don't buy fancy cars, and could care less about using our money for status. You won't find me taking wild financial bets in the stock market or any other market for that matter. We just want to make a sound financial decision. What's your take?