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Why is this posted in the FIRE bowl? You’re experiencing lifestyle inflation. The FIRE answer is that you shouldn’t do it - you should pay off the remainder of your mortgage and keep saving towards retirement.
If FIRE is not what you want, then yes I agree you likely make enough to buy a $1.4M home. Either way, it’d be a dumb move to sell your stocks to buy the house because the stock market appreciates faster than the RE market (historically, assuming you’re investing wisely).
A1 seems like a pretty reasonable person
What does your spending look like otherwise? How much out of 500K are you currently saving? Also, what mortgage rates are you seeing and how far away from retirement are you?
Depends on the answers to the above but generally I’d say:
1) $1.4M doesn’t seem like too much if you feel secure in your 500K HHI
2) Probably not. The market would likely outpace the interest expense, especially if you consider you can refinance if rates become lower. I’d prefer to have more funds on hand that are liquid in case they’re ever needed vs. locked up in the house with me unable to use them should a need arise. If you do consider going down this path, be sure to calculate what your tax burden would be from capital gains so that you’re not surprised by that.
With those numbers I wouldn’t touch your investments. Put a good down payment down and use extra funds to pay extra if you’re so inclined. You’ll have about $200k extra a year - could pay it off in less than 7 years without getting hit with additional capital gains taxes if you so choose.
I absolutely would not liquidate investments to pay down the mortgage. I’d be fine putting all of the equity you have in your current house towards the new mortgage.
With current interest rates I like the third the best
Not sure why it’s here but am very glad it is - extremely similar position and contemplating the same thing.
I’m really struggling on what to do - our house is “fine”, we have $120K left on a 2.25% note but definitely nothing amazing for hosting and such.
On the other hand while a $1.4-1.5M house would be nice I wonder if there will be buyers remorse. Anyone have any perspectives on how much happiness was generated by going up to a house like this? We’re in a LCOL area so 1.5 can still get a fantastic home
D2 - we’re in a similar position and have a list of things that the $1.4m home would need to have to work for us. Taking the jump from 2.5% to 5.5+% is a tough pill on its own - adding extra to the mortgage amount too makes it hard for it to make sense.
How would a 1.4M house be too expensive for a 500k HHI like what are you even talking about
@kpmg 1, by US Financial Institute definition, it’s definitely affordable - they are brainwashing us to live a leveraged & inflated lifestyle to keep economy moving.
Now, if you would apply FIRE concepts, you will understand my question better.
Feel sorry for you man lol. You have plenty of money, do whatever you wish
Subject Expert
Hey OP, quick question for you that may help you think about this question.
What is your asset allocation in your portfolio now?
Subject Expert
Do you have bonds?
Assuming 2% taxes and 100 monthly HOA.. Zillow mortgage shows ~9500 monthly spend. Your net monthly HHI should be enough to keep you comfortable. Things to consider (and solve for later):
1) current lifestyle / spend monthly run rate outside of home mortgage assuming it will be retained
2) how rough would it get if one of you loses their jobs or decides to pause
3) can you confidently earn more than the rate of mortgage with liquid money
Me personally, I would rather pay minimum down and keep the positive leverage assets for multiple reasons - I am confident I can make more than the rate of mortgage, wouldn’t want to liquidate and put all eggs in one basket, and can always refi with better rates when they become available.