Mariaslk

Hopefully moving over in April 08 and want to purchase home asap. I will be transferring around $260,000 which will pay for house outright. Would I be better off doing this or putting down say half of the cash and investing the remainder. I think we can use the interest to offset our taxes or something like that. What do you guys think ?

penguinsix

You would be better off renting for 3-6 months to get the lay of the land. There are so many things you can't tell in 1 week-1 month of living somewhere that a quick rental would really help you out in the long run.

The interest/tax thing is the 'mortgage interest deduction.' The interest you pay on the mortgage is deductible, and as mortgages are often interest-heavy in the first few years you can expect a bit of a break those years on your taxes.

As for more specifics, the answer is really 'depends'. If the house is for a quick sale then you might want to be out as little cash as possible (assuming the property values in that area are rising). If this is something longer term than you might want to avoid paying interest. Or you might be able to offset the interest payments by proper investing, so in the long run it might be worth it. Think we would need more info on what area, your long term plans, etc. as to whether there is a right or wrong answer.

Mariaslk

Thanks for your superfast response!
We already have a condo to live in temporarily, untill we sell it. The plan is to purchase and live in the house long term.
Area is Houston/Tx, house prices are pretty static for now and very affordable. a friend said to put down the minimum on the house and invest the rest. I'm not very confident about investing in the stock market, so would rather pay off the house and save what we would be paying, although it's the safer way, is it the best? It's very confusing for me!

chicagojlo

Wouldn't you have to pay taxes or at least offset the mortgage deduction if you left the rest of the money sitting around? I don't know much about taxes.
You should really speak to a tax advisor/financial advisor. I know that they say you are much better off putting spare money into an IRA and keeping your mortgage than paying off your mortgage early then trying to save for retirement (compound interest).

BritGuyTN

I agree in principle

BUT IRAs are very long term investments with stiff penalties for early withdrawals

I certainly would put 20% down on the property in order to get the best interest rate possible (renting for a year if necessary to get a good fico score from building credit with revolving and installment loans)

then max out my 401k up to whatever the employer matches

then max out a roth IRA if eligible, if not, max out a regular IRA

then, depending on age stick 80% of the rest in a balanced portfolio of mutual funds and the rest of it in a high yield internet savings account

penguinsix

BritGuyTN has a good reply. You really should consider seeing a financial planner to run over the different options that exist. So much is dependent on your specific needs, i.e. tax on any gains on the house, your current status in the US, how close to retirement you are, whether you will have educational need, whether you are going to 'flip' this house in a few years, your current income tax bill, etc. And on top of that what is your best option for savings, be it an untouchable IRA, an untaxable Roth IRA, or stocks that go up and down, or gold bullion, or Pounds, etc.

It really would be worth a consultation with a financial planner, preferably one with some tax knowledge (there is also the status issue--green card, USC, other).

BritGuyTN

yes

its also better to see a proper financial advisor that you pay a couple hundred dollars for rather than a sales person

i've been there several times now

UK

canada life
halifax
natwest

USA

BoA


all a bunch of crap

all interested in selling me stuff from their company that is certainly not going to build wealthe in the way they promise

the twat at canada life sold me an endowment despite me not even owning a house (I was 20 and naive)

my banker at bank of america tried to get me to open an IRA where no-load funds were not available

wankers

scrubbedexpat099

First rule of thumb is that any company with Canada in it is to be avoided.

I had a call from my Nat West Personal Banker the other day, to be fair a nice guy and a nice chat.

Also to be fair I have not been hassled in the USA, yet.

Dan725

The worst twats of all, IMHO, are Ameriprise (formerely American Express finincial advisors). Completely take the piss, trying to sell you all of their own commission heavy funds, obsessed with selling you VUL's and other life insurance. Renowned for dodgy advice and tactics. To top it off, you pay them a couple of hundered dollars as well as them trying to sell you shit. I'd add them to your list to avoid.

paddingtongreen

You need a "For Fee" financial advisor who doesn't sell products.

basementwaj

i highly recommend listening to britguytn... he knows this stuff!

I was in a situation like you... i put 50% down on the house and invested a chunk also... works ok.
Got a nice tax deduction and paid a small ammount of tax on my investment return.

BUT....... there is a lot to be said for living mortgage free!

BritGuyTN

BORING! (J/K!)

I like to keep my debt interest rate at under 10% apr

as long as its under that and I have more than enough to make the payments, I really don;t care about debt levels.

one thing to point out is that its virtually all investment related, my month to month personal spending all goes on a charge card that gets paid off in full