Current mortgage payment is rounded up to 4K. and there's about 6 years left on the 3.75% 15 year mortgage. You anticipate buying a second home (lake house0 in 4 to 5 years.) You have an "extra" 3K per month that you are putting into a taxable investment account.Just so people don't have a panic attack, I already max out a 403b, a 457b, do two "back door" Roth contributions (wife and I), and invest in 529s for my girls. To meet my long term financial goals, I have been putting an additional $3,000 / mo in a taxable investment account at Schwab and investing mostly in VTI and a bit of VXUS. I have about 6 years left on my 15 year mortgage (3.75% fixed). My monthly mortgage payment is around $3,700 dollars, I pay $4,000 monthly. I am considering diverting the $3,000 per month from the taxable account and paying extra on my mortgage. If I did that, I would have the house paid off in about 3.5 years. Thoughts?
The reason to do this is, I want to buy a lake house in the next 4-5 years. But my monthly budget cannot afford TWO mortgage payments. I would need to pay off my primary residence before taking out a loan for the Lake house. (I would put 20% down, don't lecture me please, lol)
My assumptions: You are anticipating NOT being able to carry two mortgages for up to 24 months, 4 years in the future when you buy your second home. (as an aside - will you be able to "afford" both houses with only one mortgage - you know all the monthly upkeep, big lumpy expenses of 2 property tax payments, 2 home insurance payments, maybe 1 or 2 HOA payments/assessments, owning 2 roofs, 2 HVACs, 2 of basically everything??)
Personally, I'd not aggressively pay off my primary home with such a short "pay off" date. OK, I might come up with a nice date 5 years in the future and then figure out the monthly payment to achieve that and then just review the plan every year. I'd then take the "extra" money I have and sock it away for the lake house. I'd come up with some plans for any future additional/increase in "exta" money or future windfalls. A lot can happen in 5 years. My plan would be to go into owning the Lake House with a sizeable chunk of cash above the down payment. I'm gonna need to buy a lot of stuff for the Lake House - furniture, decorating, maybe a boat (and all the expenses that go with that). I probably will want to "make the house my own" so I'd do some updating or I'd repair/replace the stuff that's gonna need repair/replacing within 5 years of purchase. I do NOT want to pay off the 3.75% mortgage quickly - only to turn around and have to borrow money at a higher interest rate in the future for all the "fun stuff" that goes with a Lake House. If after a year of owning the Lake House - I didn't have plans for any remaining "allocated to the Lake House" cash - I'd get the left over money invested (Unless I had a lot of high interest non-mortgage debt from owning the Lake House.)
That's just me.
Statistics: Posted by LittleMaggieMae — Thu Aug 01, 2024 10:31 am