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01-13-2021, 08:57 PM
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#21
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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Another option to consider is a Line-of-Credit against the stocks you own. I just got this approved for ourselves in anticipation of a local move, and we want the flexibility to buy before selling our current home, and not take a tax hit pulling funds out (we will get a low rate fixed mortgage after 1st house sells).
Fidelity only offers margin lending at pretty high rates, but Etrade offered low rates as a Line-of-Credit, close to the current mortgage rates (but variable of course).
-ERD50
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01-14-2021, 07:40 AM
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#22
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Apex and Bradenton
Posts: 1,793
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Quote:
Originally Posted by CountingDown
Anyone familiar with recasting?
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Yes. We recently downsized the 6 BR kid hotel (5 kids at it's max) to a 3 BR (MBR on ground floor) forever home. I was/am still w*rking and easily qualified for two mortgages. Once the old home closed, I called up our new mortgage loan officer and asked him to recast the new mortgage. He knew this was coming from our initial planning. It was very easy. I gave him a check for about the proceeds amount on the old house, and shortly after I received a much reduced new mortgage payment. I don't think there was any new documentation to sign, if there was it was minimal. It happened so quickly, I never had to pay the first big payment on the new mortgage.
I'm a fan of recasting and would do it again, if needed.
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01-15-2021, 06:11 AM
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#23
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Confused about dryer sheets
Join Date: Aug 2012
Location: NA
Posts: 9
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Quote:
Originally Posted by ERD50
Another option to consider is a Line-of-Credit against the stocks you own. I just got this approved for ourselves in anticipation of a local move, and we want the flexibility to buy before selling our current home, and not take a tax hit pulling funds out (we will get a low rate fixed mortgage after 1st house sells).
Fidelity only offers margin lending at pretty high rates, but Etrade offered low rates as a Line-of-Credit, close to the current mortgage rates (but variable of course).
-ERD50
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ERD, We do have an E*TRADE account so I’ll check into this as well. Lots of options so just trying to narrow them down. Thanks!
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01-15-2021, 06:47 AM
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#24
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Confused about dryer sheets
Join Date: Aug 2012
Location: NA
Posts: 9
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Quote:
Originally Posted by latexman
Yes. We recently downsized the 6 BR kid hotel (5 kids at it's max) to a 3 BR (MBR on ground floor) forever home. I was/am still w*rking and easily qualified for two mortgages. Once the old home closed, I called up our new mortgage loan officer and asked him to recast the new mortgage. He knew this was coming from our initial planning. It was very easy. I gave him a check for about the proceeds amount on the old house, and shortly after I received a much reduced new mortgage payment. I don't think there was any new documentation to sign, if there was it was minimal. It happened so quickly, I never had to pay the first big payment on the new mortgage.
I'm a fan of recasting and would do it again, if needed.
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Latexman, this is more in line with what we were thinking but do not know of anyone who has done this... until now! Initially I would rather not use all of our cash reserves in addition to cashing out too much in taxable accounts for a larger down payment (and causing a larger tax bill).
While interest rates are so low I like the option to lower the payments after the sale of our house. We could afford the payments for the early years and pay down gradually from there (more when SS kicks in for me). I’ll be doing some ROTH conversions and could turn on a small pension of around $700/mo in a couple of years.
Just trying to figure out the right order in which to pull the funds. Also talking to my CPA next week but you and others have given me some ideas to consider. I love the diversity of thought and opinions on this board as I have learned so much over the last several years. Thank you!
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01-15-2021, 07:30 AM
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#25
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Recycles dryer sheets
Join Date: Jul 2020
Posts: 283
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Quote:
Originally Posted by ERD50
Etrade offered low rates as a Line-of-Credit, close to the current mortgage rates (but variable of course).
-ERD50
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I have accounts at E-Trade, but for the line of credit they won't let you use IRAs as collateral, and I don't have the required 50K in a non-IRA account. If I were to add enough to get to 50K what would the max loan I could get likely be? Would I have to maintain 50K in the account?
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01-15-2021, 08:51 AM
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#26
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Dallas
Posts: 1,150
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Quote:
Originally Posted by tb001
My only question would be if the new house changes your spend significantly. Ours did, but so far well worth it. More switching costs than we anticipated, as we’ve done improvements on the house, but they have been discretionary and the funds have been there.
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This is a very good point. Our utility bills more than doubled when we switched out from 3500 sqft (medium ceiling) home to 5000 sqft (high ceiling) home. We are about to move in to a 2400 sqft house (low ceiling) where utility bills will be 4 times less than current 5000 sqft house.
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01-24-2021, 10:22 PM
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#27
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Recycles dryer sheets
Join Date: Jul 2020
Posts: 283
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Quote:
Originally Posted by finnski1
1) At first I thought you could take a loan from your 401k's but I think the limit is only $50k (although the CARES act extended this to $100k temporarily) and you have to pay it back with after tax dollars which then means you are taxed again on the future when you withdraw from the 401ks in retirement.
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I've seen this quote before, but it should be kept in mind that you're spending the loaned money without paying any taxes on it, nor is it moving you into a higher tax bracket in the process, so the fact that you're paying back the loan in after tax dollars over time seems at worst like a wash to me.
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01-25-2021, 06:48 AM
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#28
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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Quote:
Originally Posted by cat4ever
I have accounts at E-Trade, but for the line of credit they won't let you use IRAs as collateral, and I don't have the required 50K in a non-IRA account. If I were to add enough to get to 50K what would the max loan I could get likely be? Would I have to maintain 50K in the account?
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Sorry, I missed this post.
I got a LOC for ~ 65% of the account value. That account is ~ 90/10, with the 90 made up of BRK, IWM, and SPY (so broadly diversified), and 10 ~ FTBFX (bond fund).
Not sure how much of the calculation is based on the asset mix, I imagine ETRADE could answer that for you. But it seems they'd give a higher % to a more stable investment, like bond funds.
And yes, you'd have to maintain enough to cover the loan ( that's what backs it and provides the low rates), at the % they state.
-ERD50
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