I realize this question pertains to investing, but it's more a question of how I can best handle receiving a windfall. I apologize if this is the wrong place to ask.
I currently have enough cash for a down payment on a house and would like to be able to retain the ability to buy a house while also investing as much as I can afford to. However, I'm very uncertain about several important life factors including if/when I'd have a need to buy a house instead of renting. How can I make a plan to retain the ability to buy a house (and avoid missing out on other potential opportunities) when there are so many unknowns?
I'm 27, single, and expect to change jobs in the next 2-3 years which would likely involve moving. I'd probably rent for at least a year wherever I move to next and think it's fairly likely I wouldn't look to buy a house for at least 5 years. On the other hand, it might work out that I'm better off renting for the rest of my life ¯\_(ツ)_/¯. I'm currently contributing the maximum to both my Roth IRA and Roth 401k which is all I can afford to save with my current salary. I have a 6 month emergency fund in a savings account and a separate money market fund with about $75,000 that mostly came from an inheritance.
I played around with some mortgage calculators and found that the $75k would be roughly how much I would need for a 20% down payment + closing costs on a mortgage that would cost no more than 25% of my current gross salary. Alternatively, I looked into saving for only a 5% down payment and investing the other 15% (this would be in a taxable brokerage account). 5 years of gains would be nice, but I'm not sure if that's worth the risk of higher mortgage + mortgage insurance payments if the markets happen to be down when I'm looking to buy a house and can't afford to sell my investments. Furthermore, when I start to consider different time horizons, different house prices I could potentially end up paying, different income/expense situations I may find myself in in the next few years/decades, and potential future market conditions, it starts to feel like there's too much uncertainty to be able to plan effectively. How can I minimize the risk of not being able to buy a house if/when I choose to do so while maximizing potential gains before I buy a house?
I currently have enough cash for a down payment on a house and would like to be able to retain the ability to buy a house while also investing as much as I can afford to. However, I'm very uncertain about several important life factors including if/when I'd have a need to buy a house instead of renting. How can I make a plan to retain the ability to buy a house (and avoid missing out on other potential opportunities) when there are so many unknowns?
I'm 27, single, and expect to change jobs in the next 2-3 years which would likely involve moving. I'd probably rent for at least a year wherever I move to next and think it's fairly likely I wouldn't look to buy a house for at least 5 years. On the other hand, it might work out that I'm better off renting for the rest of my life ¯\_(ツ)_/¯. I'm currently contributing the maximum to both my Roth IRA and Roth 401k which is all I can afford to save with my current salary. I have a 6 month emergency fund in a savings account and a separate money market fund with about $75,000 that mostly came from an inheritance.
I played around with some mortgage calculators and found that the $75k would be roughly how much I would need for a 20% down payment + closing costs on a mortgage that would cost no more than 25% of my current gross salary. Alternatively, I looked into saving for only a 5% down payment and investing the other 15% (this would be in a taxable brokerage account). 5 years of gains would be nice, but I'm not sure if that's worth the risk of higher mortgage + mortgage insurance payments if the markets happen to be down when I'm looking to buy a house and can't afford to sell my investments. Furthermore, when I start to consider different time horizons, different house prices I could potentially end up paying, different income/expense situations I may find myself in in the next few years/decades, and potential future market conditions, it starts to feel like there's too much uncertainty to be able to plan effectively. How can I minimize the risk of not being able to buy a house if/when I choose to do so while maximizing potential gains before I buy a house?
Statistics: Posted by 95233stegosaurs — Sat May 18, 2024 2:42 pm — Replies 1 — Views 66