| Selling House need suggestions |
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johnsje
New Member
Cash: $ 0.85
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Joined: 17 Mar 2006
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| Selling House need suggestions |
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Ok, here’s the deal. I have a second house that my realtor seems to think should bring in around 210k. The house is completely paid for. So if the house actually does sell for this, I would expect after all fees and taxes I would be at about 190k cash in the bank.
I roughly have 16k in debt that I would pay off and then cut up all Credit cards and hopefully never touch them again. So now I have 174k left.
I owe 240k on my house which is valued at 280K as of 2 years ago. Probably about 310k now. I have a rate of 5.5 on a 30 year. With taxes, insurance and premium it is at about 2k pre month. I know I need to pay id down far enough to get rid of the mortgage insurance. So I would need to through at least another 16k at it to get it there. Should I pay more on this? I can't see refinancing at the current rates, would not pay. I guess I would save a little per month, but not that much.
So if I do all the above I would be left with 158k. What is the best way to use this? 20k emergency fund? Roth IRA for both wife and I, start College fund for baby on the way? Who are the best brokers to deal with when investing? I want to use the money wisely and to make sure that it will allow my family to have some security as we start our family.
All Ideas appreciated.
Thanks
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Fri May 05, 2006 4:25 pm |
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Stock Mama
Full Member
Cash: $ 13.80
Posts: 68
Joined: 06 Apr 2006
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How do you feel about debt? Is the mortgage something you think about often and wish you could get rid of? Would you sleep better at night if your house were paid for? If so, then use part or all of the money from the sale to pay down your mortgage sooner.
If not, then invest it in something that will produce a higher interest rate than what you're paying for your house. You could, if you wanted, use some of the profits to pay off your mortgage faster.
Or some combination of the above, depending on your goals and your comfort with "good" debt (that is, debt for something like a house that appreciates in value).
As for brokers, I use Scottrade. They charge $7 per trade, have great deals on IRAs, lots of no-load funds, and don't push you to buy anything. In fact, they don't offer any investment advice at all. You have to do all the investment research yourself, but that's the way I like it. I don't want a broker pumping up his commissions by getting me to make trades I don't really want.
I would suggest finding a good accountant to advise you about taxes on the sale and any tax considerations having to do with investments and mortgages. That's a big hunk of money to deal with all at once, and could have some interesting tax consequences.
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Sat May 06, 2006 4:29 am |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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quote:
Originally posted by Stock Mama
How do you feel about debt? Is the mortgage something you think about often and wish you could get rid of? Would you sleep better at night if your house were paid for? If so, then use part or all of the money from the sale to pay down your mortgage sooner.
Never, EVER make financial decisions based on emotion! 
The mortgage would not keep one awake at night, only ignorance.
Just pay enough to ditch PMI and any HIGH-interest debt (if your 2nd is 10%, ditch it).
OR
If you are renting the 2nd house, take a regular mortgage on it to eliminate expensive debt and invest the rest.
"Expect me when you see me."
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Sat May 06, 2006 1:25 pm |
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bong12187
Preferred Member
Cash: $ 24.50
Posts: 120
Joined: 31 Jul 2005
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| Re: Selling House need suggestions |
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quote:
Originally posted by johnsje
Ok, here’s the deal. I have a second house that my realtor seems to think should bring in around 210k. The house is completely paid for. So if the house actually does sell for this, I would expect after all fees and taxes I would be at about 190k cash in the bank.
I roughly have 16k in debt that I would pay off and then cut up all Credit cards and hopefully never touch them again. So now I have 174k left.
I owe 240k on my house which is valued at 280K as of 2 years ago. Probably about 310k now. I have a rate of 5.5 on a 30 year. With taxes, insurance and premium it is at about 2k pre month. I know I need to pay id down far enough to get rid of the mortgage insurance. So I would need to through at least another 16k at it to get it there. Should I pay more on this? I can't see refinancing at the current rates, would not pay. I guess I would save a little per month, but not that much.
So if I do all the above I would be left with 158k. What is the best way to use this? 20k emergency fund? Roth IRA for both wife and I, start College fund for baby on the way? Who are the best brokers to deal with when investing? I want to use the money wisely and to make sure that it will allow my family to have some security as we start our family.
All Ideas appreciated.
Thanks
How much did you buy your second house?
Were you having the second home rented?
Did you factor in the tax that you have to pay when you sell the house. For planning purposes I use 30% of the profit for Uncle Sam.
If you are having the second home rented, why not just refinance the place and get only what you need to pay cc and enough $$ to bring down home mortgage to 80% so that you can drop PMI + 20k emergency fund. You will then be able to save 19k for taxes and realtor expense. You can then take the monthly cc payment + PMI payment and invest them somewhere. Yes, you'll still have a mortgage with the second home but if you are having that rented then it should pay for itself. Also, 16k cc, 16k pmi pmt, 20k emergency fund totalling 52k for a 30 yr loan 6.5% rate will give you about $329 per month. This will save you having to pay taxes and realtor for 19k.. If you sell the place, then you are in the hole for 19k and your 158k left will have to work hard to get that money back. How long do you think it will take you to get that back? This scenario pretty much took care of all your requirements without having to part with 19k. Yeah, you now have a new 30 yr mortgage but if you are having this rented then it really doesn't matter because you are receiving passive income.
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Sun May 07, 2006 12:36 am |
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mbd
Member
Cash: $ 4.60
Posts: 23
Joined: 31 Mar 2006
Location: Rogers, AR
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1. I recommend that you keep an emergency fund of 6-12 months expenses, depending on how likely you are to need it (how stable your source of income is).
2. Be sure you are saving enough or have enough for retirement. This is more important than saving for your child's college.
3. Analyze all of your debt. Whether it makes sense to keep it can be evaluated based on the rate of interest (after taxes) compared with how much you can earn on other low-risk investments (AFTER TAXES!).
It sounds like to me you're in pretty good shape, assuming you have an income that supports you and allows you to continue saving. Good luck!
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Sun May 07, 2006 6:08 am |
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johnsje
New Member
Cash: $ 0.85
Posts: 4
Joined: 17 Mar 2006
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| Re: Selling House need suggestions |
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quote:
Originally posted by bong12187
quote:
Originally posted by johnsje
Ok, here’s the deal. I have a second house that my realtor seems to think should bring in around 210k. The house is completely paid for. So if the house actually does sell for this, I would expect after all fees and taxes I would be at about 190k cash in the bank.
I roughly have 16k in debt that I would pay off and then cut up all Credit cards and hopefully never touch them again. So now I have 174k left.
I owe 240k on my house which is valued at 280K as of 2 years ago. Probably about 310k now. I have a rate of 5.5 on a 30 year. With taxes, insurance and premium it is at about 2k pre month. I know I need to pay id down far enough to get rid of the mortgage insurance. So I would need to through at least another 16k at it to get it there. Should I pay more on this? I can't see refinancing at the current rates, would not pay. I guess I would save a little per month, but not that much.
So if I do all the above I would be left with 158k. What is the best way to use this? 20k emergency fund? Roth IRA for both wife and I, start College fund for baby on the way? Who are the best brokers to deal with when investing? I want to use the money wisely and to make sure that it will allow my family to have some security as we start our family.
All Ideas appreciated.
Thanks
How much did you buy your second house?
Were you having the second home rented?
Did you factor in the tax that you have to pay when you sell the house. For planning purposes I use 30% of the profit for Uncle Sam.
If you are having the second home rented, why not just refinance the place and get only what you need to pay cc and enough $$ to bring down home mortgage to 80% so that you can drop PMI + 20k emergency fund. You will then be able to save 19k for taxes and realtor expense. You can then take the monthly cc payment + PMI payment and invest them somewhere. Yes, you'll still have a mortgage with the second home but if you are having that rented then it should pay for itself. Also, 16k cc, 16k pmi pmt, 20k emergency fund totalling 52k for a 30 yr loan 6.5% rate will give you about $329 per month. This will save you having to pay taxes and realtor for 19k.. If you sell the place, then you are in the hole for 19k and your 158k left will have to work hard to get that money back. How long do you think it will take you to get that back? This scenario pretty much took care of all your requirements without having to part with 19k. Yeah, you now have a new 30 yr mortgage but if you are having this rented then it really doesn't matter because you are receiving passive income.
All Great Advice so far thank you. I try to do all my money stuff without emotion. Hard sometimes though.
The house was my parent’s house that I got when they passed a few years back. My grandmother was living in it until just recently.
The house has no mortgage on it at all, so it’s free and clear. The most recent value was at 180kand if I should it for around 205 to 210 I would have roughly 5K in tax. It is a 15 % tax of Capital gains correct. The realtor would be 6%, so that would be around 12 I suppose. And after closing I would have 190K free and clear.
Thought about renting, but I would get would be 700 or so a month and then having to pay all the 2000 in taxes per year and that’s when homesteaded, it just did not makes since. Also I did not want someone trashing it. Cost more in the long run I think for that.
I will have at least 6 months of emergency money. Job is pretty stable, but who knows. Do not want to refi a paid for house for any reason. I will pay off all debt.
No the problem that I am running into is that my wife does not want to work full time after the birth of the child, and I don't want her to either if I can help, but even if I get the my current house down to 100K it still seems like its going to be at a price of around 1200 per month due to rate hikes. Plus our taxes are 3k per year. I hate taxes.
So I was thinking, I would setup at least 2 Roth’s, for both my wife and I and put enough away to start with for 2 years paying on that. So that’s 16k towards retirement. She already has a TRA from her teaching job. Not sure the balance here. She is checking. But I thinks its somewhere around 15k or so. I have a 401k that’s somewhat new and it’s only at 4k, but it will grow, plus the stock options are at about 1K now as well and growing. So I think retirement should be covered here, at least I hope.
I will have to get with an accountant to go through all the numbers before I do anything with the money I guess.
The college fund may not be as important as the retirement, but I want to be able to send my kid(s) to whatever school they want to go to. I did not have this option. So it’s important to me that they get a better start at things as well. But if I can get then to get Scholarships, well that’s even better.
Whatever is left after all of this will go towards finishing the basement, maybe a more fuel efficent car and then to investing. Any good places to research investments. I have been looking at Motley Fool, but I am a little hisitant of pay services like that. Again, thanks for the advice
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Mon May 08, 2006 12:37 pm |
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johnsje
New Member
Cash: $ 0.85
Posts: 4
Joined: 17 Mar 2006
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quote:
Originally posted by muneepenee
1. wot bout the 1.6 mil hu went bankrupt last yeer? Yu thank em shoodnt werree bout maby luze the hous? Get reel buddee.
2. wot bout em hu havnt had a job in 5+ yeers?
3. wot bout em hu get disabeled evree yeer & kant werk NE-more?
4. wot bout wen bredwinner die & leev famlee destitiut? (bout 200,000/yeer)
wot bout english. I really did not understand any of this. Well maybe a little. But I have no idea what version of english you are speaking.
I shure hope this is not how all or kids are going to be talking with all the IM'ing thats going on.
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Mon May 08, 2006 12:41 pm |
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