another home buying brainstorming discussion

[RetiredHappy]

I thought it to be a weird FA suggestion.

With more clarity what he suggested was a mortgage or a jumbo loan with a low rate and a monthly lower than I pay now for housing. He suggested I use securities as loan collateral. Not use them for a line of credit to buy a house.

When I bought our current home, with mortgage interest at 2.75%, our FA suggested that we get a small loan for the difference between our new home and previous home that we were selling. This is a separate home transaction from a prior sale/purchase which occured a few years before which I had noted above.

The mortgage company, BOA, only looked at cash flow, i.e. income, dividends/interest, SS, annuities, and RMD withdrawals from IRA. Assets/securities are not used as loan collateral. The accounts were with the same company, i.e. Merrill Lynch.

What your FA said just would not work. It's all about income - cash flow and withdrawals.

 

[pb4uski]

I have tried a few of them.

I was fine to rent forever. I would target 1-2 yr old new builds, usually a situation where the owner had to move after it was built and never lived in it but wanted to rent 5 years before selling etc.... so id rent there for 5 years then move on to the next new house that looked good.

This was all going great until now later on with 2 young kids, a house I rented went bad when the owner who moved lost his job and had to come back only giving me one lease term as a renter. Hard to find another place in the area so have to change schools for the grade K kid and move. Plus just painful to move into a place, un pack and then immediately repack to move again, Plus $$$ moving again so soon. Eats up lots of time and money to do other things with. My kids love this summer of packing as you can imagine.

Want to buy a place mostly to lock in location till the kids are developed and ready to move along to college or whatever. Otherwise, id just keep renting for sure. Fine holding a property for 15-20 years.

Well, that introduces a non-financial consideration that is new to the thread and no rent vs buy calculator can factor in.

 

[pacergal]

Don't forget that going from a renter to an owner is quite a bit different. You are now responsible for any repairs, upkeep, replacements, yard work, etc. Plus property and homeowners insurance.
It is more than a mortgage payment vs rent.
Agree with others that a home, whether rental or owned, is not part of your investment or asset allocation, but can be counted towards net worth.