Jessica and her husband are juggling two home sales and one home purchase within the next two to four years. How do they execute wisely while navigating a tight real estate market?
Zerai works two jobs that both offer a pension and retirement plan. Can he take advantage of everything at his disposal or must he make some tough choices?
Emily and her husband bought their home a year ago. But a national builder tempts them to sell and upgrade using a 3-2-1 buydown mortgage. Should they do it?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Jessica asks (at 03:48 minutes): My husband and I want to sell the two properties we own to upgrade to a larger home in the Midwest but we’re unsure about the order of operations.
Our primary residence is located in the Midwest and our rental is located in Brooklyn, NY. We want to move within the next two to four years. How should we juggle these three transactions?
Here is our situation:
- Our Brooklyn apartment is worth $1 million with $350,000 equity. This was our primary residence for three years before we started renting it out. We plan on selling this apartment when our renters move out in 2025.
- Our little house in the Midwest has $280,000 left on the mortgage at a 5.75 percent interest rate and monthly payments of $2,800. Our family of four will probably outgrow this house in two to four years.
- The next house we want to buy will cost somewhere between $800,000 and $1.2 million. We want to put down a hefty down payment to keep the monthly costs low.
Given our numbers and timeline, should we use the proceeds from the sale of the apartment to pay off the mortgage on our little Midwest house and live mortgage-free for two to three years?
Or do we leave our mortgage alone, put the money into investments, and earmark this account as our down payment for the bigger home? Or is there a third option that I’m not thinking of?
If we paid off the mortgage and lived rent-free, we’d still “pay” the mortgage amount to ourselves in a high-yield savings account or investments or both.
My concern with paying off the mortgage is that we’d lose out on our dream home because of a home sale contingency. The area we want to buy in has had very limited inventory for years.
What should we do?
Zerai asks (at 29:07 minutes): If I have a full-time and part-time job, can I max out my retirement plans for both jobs?
I have a full-time job with the state government that offers a 457 retirement plan plus a pension. My part-time job with a nonprofit also offers a pension and a 401k.
Since these are two different entities, both nonprofit, can I max out my 457 contributions at my full-time job and contribute to the 401k at my part-time job?
Please help. I can’t find a clear answer anywhere.
Emily asks (at 43:47 minutes): Should we move on an opportunity to use a 3-2-1 buydown mortgage to upgrade our home in anticipation of long-term needs?
My husband and I bought our current home a little over a year ago. We have a 15-year mortgage with a 5.125 percent fixed interest rate and $266,000 in equity.
Our home is small. While it works for us now, we can see the need for a larger home as our son gets older. The area we live in is expensive, with limited land to build new homes.
Right now, a new home from a national builder that would suit our long-term needs costs $900,000 to $1 million. The builder is offering a 3-2-1 buy down on the mortgage.
The first-year rate would be 3.99 percent, the second-year rate would be 4.99 percent, the third-year rate would be 5.99, and the remaining years 4 to 30 would be 6.99 percent.
Is there anything to watch out for with these types of mortgages? If we know we want to live in this area for the long run, does it make sense to sell our current home and move now?
Resources Mentioned:
Salary Deferral | Website
IRC 457(b) Deferred Compensation Plans | Website
Stacking Benjamins + Jon Acuff | Podcast Episode
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