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Do you need $400,000 for a down payment? You aren't sinking all of that cash into the house are you? Interest rates on houses are LOW, market earnings are HIGH. I'd invest most of that into some mutual funds that are reasonably safe but still paying a nice return and then put the rest for the downpayment into a money market account or check with some credit unions in your area to see if they have a better rate for checking or savings accounts--often they do.
Do you need $400,000 for a down payment? You aren't sinking all of that cash into the house are you? Interest rates on houses are LOW, market earnings are HIGH. I'd invest most of that into some mutual funds that are reasonably safe but still paying a nice return and then put the rest for the downpayment into a money market account or check with some credit unions in your area to see if they have a better rate for checking or savings accounts--often they do.
There is no such thing as a 100% safe investment paying more than a mortgage would cost. OP must base the decision on his/her risk tolerance, not yours, mine, or anyone else's (except a spouse if there is one).
If you put the funds into a savings account such as Ally Bank currently paying 1%, make sure you put a max of $250K in each account which is the FDIC insurance limit. If you want to be liquid and safe that is the only way to go.
There is no such thing as a 100% safe investment paying more than a mortgage would cost. OP must base the decision on his/her risk tolerance, not yours, mine, or anyone else's (except a spouse if there is one).
um, ok
Next time someone asks for an opinion on a chat board, don't answer I guess.....
Do you need $400,000 for a down payment? You aren't sinking all of that cash into the house are you? Interest rates on houses are LOW, market earnings are HIGH. I'd invest most of that into some mutual funds that are reasonably safe but still paying a nice return and then put the rest for the downpayment into a money market account or check with some credit unions in your area to see if they have a better rate for checking or savings accounts--often they do.
But you have no idea if this will stay the same, do you?
Also, OP said they may want to jump into a home at any point... and if OP is from Bellingham or Seattle then $400k could still only be 30% down payment. Easily...
Honestly, I am likely to be in OP's situation in another 4-5 years.. I'll be buying a (second) property in the Seattle area with about $400k.
Our market is HOT, HOT, HOT. We're seeing 9-10% appreciation. Our condo is worth nearly double what it was 5 years ago and inventory is ridiculously low and there are a lot of cash-heavy buyers in the game.
But you have no idea if this will stay the same, do you?
Also, OP said they may want to jump into a home at any point... and if OP is from Bellingham or Seattle then $400k could still only be 30% down payment. Easily...
Honestly, I am likely to be in OP's situation in another 4-5 years.. I'll be buying a (second) property in the Seattle area with about $400k.
Our market is HOT, HOT, HOT. We're seeing 9-10% appreciation. Our condo is worth nearly double what it was 5 years ago and inventory is ridiculously low and there are a lot of cash-heavy buyers in the game.
Not an easy market to work with.
That is why I asked if he needed the full amount and the suggestion to park the excess in mutual funds would allow him to have access to the funds if needed down the road . But keep in mind, you take out a mortgage at 3%, it stays at 3% (assuming you don't get an adjustable rate which would be stupid right now). The mutual fund money is going to make way more than 3% in the foreseeable future, but even parking it in a good muni fund would get him more than 3% and certainly more than 1%.
Also keep in mind, buying in a HOT, HOT, HOT sellers market is a bad idea.....
o is a stock , you don't put short term money in stocks . in fact if he put his money in "o " 3 months ago and needed it he would have lost more than he got
That is why I asked if he needed the full amount and the suggestion to park the excess in mutual funds would allow him to have access to the funds if needed down the road . But keep in mind, you take out a mortgage at 3%, it stays at 3% (assuming you don't get an adjustable rate which would be stupid right now). The mutual fund money is going to make way more than 3% in the foreseeable future, but even parking it in a good muni fund would get him more than 3% and certainly more than 1%.
Also keep in mind, buying in a HOT, HOT, HOT sellers market is a bad idea.....
You have no way of knowing what mutual funds will earn in the near future. Even muni bonds do not necessarily beat the mortgage. For instance, the Vanguard California medium term tax exempt fund has a YTM below 3% currently, which means it is likely to see the strategy lose over the ~5-year current duration. The long term fund still only has a 3% YTM, and on top of this it is more volatile than the medium term fund because the effective duration is >7 years.
That's a terrible recommendation given the parameters given by the OP. It carries far too much risk
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. But keep in mind, you take out a mortgage at 3%, it stays at 3% (assuming you don't get an adjustable rate which would be stupid right now). The mutual fund money is going to make way more than 3% in the foreseeable future, but even parking it in a good muni fund would get him more than 3% and certainly more than 1%.
