My husband and i are 30 with 5000 in our retirement, we will be inheriting around $450000.00 in a couple years

Question

We want to build a 500,000.00 home. Should we invest our $ for retirement or would it be wiser to use it to build our home. My husband makes about 250,000 a year. We need some help. Thank you

Answer 1

You would be better off putting the 450K into an investment that pays more than your payments on a $500,000K house. That way you will make money on it.

Answer 2

I would invest it. Maybe use 50k for a down payment, but if your husband makes 250k/ year you should have no problem paying off a 10 or 15 year morgage. Also If he makes that much you really need to be putting as much as you can into a retirement account. Otherwise when it comes time to retire, you either won't be able to afford to, or you will suffer a serious decline in living style. I'm 26 and make a little over 30k/yr and I have more then that in my retirement.
I would look into opening a Roth IRA, and make the maximum contribution every year, and by also investing the inheritance (not in a retirement acct), you will have a good sum of money to fall back on.

(ps) If you need someone to set up a retirement acct with, I have a good friend that does just that, thats where most of my money is. lol.

Answer 3

Does your husband have a retirement at his work? If not, then I would be setting aside a decent amount for retirement - how sure are you on the inheritance? That would make a difference in how you spend your money now. The cost of a home will depend (incredibly) on where you live. The East and West coasts are really expensive as are the "vacation wonderful" spots. Perhaps a financial manager could give you some really good advise - I had one great financial advisor through one of the brokerage houses, or find one through your bank.

Answer 4

Financially speaking it is generally better to finance as much of the house as possible (ie take the mortgage), as long as you invest the money prudently. You should get returns on your money in the long term, counting the deduction for mortgage interest and accounting for taxes, that outweigh the cost of borrowing.

But it might not be a bad idea to put down up to a 30% down payment, and only borrow 70% of the cost of the house. Traditionally if you put 30% down, you get good rates and they don't even bother to check your credit. Also that gives you some breathing room on the mortgage, in case the housing market turns against you and your home loses value.

You can bet that rich sophisticated people do indeed take out mortgages, even though they don't have to.

Of course, ultimately your own tolerance for debt is important too. If a big mortgage would keep you awake at night and make you worry, then do what you gotta do.

Answer 5

If the rates are about the same as they are now (or lower), I would invest most of the money. Although each of you can only put about 20,000 into retirement accounts per year, there's no reason to tie up all that money in your house. The stock market has earned on average about 11%/year, and your mortgage will be a deductible 6%/year, so it only makes since to put your money where it will be earning the most. Of course, you'll want to put down whatever you need ($100,000?) to avoid paying for PMI, but other than that, you should invest in low-cost, well-diversified mutual funds like Vanguard. Oh, and every year, you'll be able to either transfer your mutual funds into your retirement accounts, or just use what you've earned for the year. I'm kind of babbling, but I think about this stuff a lot.

Answer 6

you Husband makes 250,000 and year and you only have saved 5000, what

build a cheaper house and start saving as hard as you can, then sell the house when you have real assets and build a bigger house

there has never been a 10year period where realiste has out proformed the market

and if he really makes 250,000 a year you could put a 100,000 down and mortage the rest, you should have crazy credit put the rest in some ballaced fund and try to get 10% off of it, giving you 40K per year towards retirement

Answer 7

I don't think this is a real problem anybody could answer this one. I mean why would you need a 500, 000 home when you do the layouts of your new home take about 200,000 off and just spend 300,000 and if you say your husband make 250,000 a year what does it matter. I mean honestly your husband can afford a 800,000 home if you guys really wanted to do that. finance companys give people loans for up to 3 to 4 times their salary.

Answer 8

Invest half in the home so you can still get the mortgage tax deduction Get a mortgage for 10 years. Invest the rest for retirement in a safe investment because there will be a recession and/or depression coming soon due to the devalued dollar, continuing wars, and national debt to China and Japan.

Answer 9

If you are sincere, never advertise money on line as this there are too many crooks reading perhaps and you are making your family a target.
If you have the inheritance you can pay in cash for the new house in a couple of years or finance soon with lower interest rates and payments.It depends on your future plans and what you income to debt ratio is.

Answer 10

first call a tax attorney and financial advisor (both). Put 20% down on the house and put the rest in retirement and a little in your personal checking account(3 months salary for a rainy day) most of your interest on your home loan is tax deductible

Answer 11

Dr Deth is right - about $250k down on the house - get a mortgage for the rest. Mortgages are cheap loans compared to other loans (and they are tax deductible, other loans aren't). Invest the other $200k. But with that income you really need more in retirement - you aren't taking advantage of the tax benefits of your 401k. It should be maxed out - if you both have one they should both be maxed out. My household income is half of yours and we max ours out (and we're only 4 years older). The tax advantages are just too great to leave that money on the table.