We are currently building a home that will be ready to move into 6 months from now. It will come out to $850,000 and we are assuming the interest rate will be fairly high, guestimating 7.31%, property taxes would be around $12k/year
I am a tech worker at a stable big name non-tech company (if that means anything) whereas my spouse has a stable career at a volatile company. If I lost my job today, then I would struggle to find another one given the climate, while my spouse would have no trouble at all.
We plan on having kids in the next year or so.
I'm going crazy trying to plan for finances, so here are my questions (refer to the table below):
- Should we put the entire $350,000 windfall as a downpayment toward the house to lower our monthly payments?
- For any extra cash left over after maxing out our 401ks and Roth IRA, should we be throwing everything at the mortgage?
I've seen many people argue that its better to invest in index funds to have liquidity and make extra payments later on... however isn't mortgage interest at its highest at the beginning of the loan?? and i would also need to beat 7.31%, accounting for capital gains taxes, for it to be on par with paying down the loan.
I want to pay off the house as soon as possible. I want to take the $350k and use that as our downpayment. Then every year I want to take our RSUs and bonuses and throw it at the loan. Hell, if I could just use my income to pay down the loan and have my spouse use hers to support us, I'd be willing to do that. If rates drop enough, then maybe I can back off.
Is this too aggressive? Paying off a mortgage loan with a high interest rate and high loan amount sounds very appealing to me, especially as someone who is constantly afraid of losing their job.
Category | Me | Spouse |
---|---|---|
Annual Salary | $160,000 | $160,000 |
Yearly 401(k) Contribution | $23,000 | $23,000 |
Roth IRA Contribution (we do this end of the year via backdoor) | $7,000 | $7,000 |
Monthly Take-Home Pay | ~$3,700 | ~$3,700 |
Annual Bonus (not guaranteed) | 15% | 20% |
RSUs/Stock Options | ~$80k over next 4 years | $100k over next 4 years |
Windfall | $350,000 (Spread throughout CDs and money market fund) | Joint |
Emergency fund | $100,000 (Spread throughout CDs and HYSA) | Joint |
Debt | None | None |
original posted by jgermany1 to r/personalfinance on Mon, 04 Mar 2024 18:04:02 GMT.