In 5 years (age: upper 50s) we may semi-retire and move close to family who live in a HCOL area. Lots of people advocate a paid off house in retirement, but the equity in our current house (LCOL area) is a tiny fraction of the cost of a house where we would like to move.
Option 1: Buy house. Use $400k home equity as down payment, take out mortgage for $1 million. Remaining portfolio will be $5 million, which is 25x expenses including the mortgage payment of $7000/month.
Option 2: Buy house. Pay $1.4 million in cash. Remaining portfolio will be ~$3.9 million after taxes, which covers 31x expenses including monthly RE taxes of $1000.
Option 3: Rent a house. Portfolio will be $5.4 million which covers 31x expenses including rent of $5000/month.
We may work part time and have some form of income for a few years, but I’m not factoring that in here.
Are we thinking about these options in the right way? What would you choose? Should the option we choose affect our asset allocation? (i.e. more bonds if we rent)
-Admiral Fun
Option 1: Buy house. Use $400k home equity as down payment, take out mortgage for $1 million. Remaining portfolio will be $5 million, which is 25x expenses including the mortgage payment of $7000/month.
Option 2: Buy house. Pay $1.4 million in cash. Remaining portfolio will be ~$3.9 million after taxes, which covers 31x expenses including monthly RE taxes of $1000.
Option 3: Rent a house. Portfolio will be $5.4 million which covers 31x expenses including rent of $5000/month.
We may work part time and have some form of income for a few years, but I’m not factoring that in here.
Are we thinking about these options in the right way? What would you choose? Should the option we choose affect our asset allocation? (i.e. more bonds if we rent)
-Admiral Fun
Statistics: Posted by Admiral Fun — Sat Mar 23, 2024 8:14 am — Replies 8 — Views 329