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mortgage versus cash in current market

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  • mortgage versus cash in current market

    I am a young physician who comes from a disadvantaged background and am at a stage in life where I realize I know little about personal finances. I am in academics and previously didn't care to learn much but this has changed recently. I am grateful for this resource.

    I will be married by the end of this calendar year. My fiance is in a low tax bracket, making about a 1/5 of what I make. So this year may be the last year she is in that lowest tax bracket. We have similar credit scores (highest tier). She has family assets in a diversified investment portfolio due to family wealth. I make significantly more than her, but again, an academic salary. I have medical school loans that will be forgiven or else paid off completely if that does not work out. I have a current home mortgage, she owns her current home.

    Open to any suggestions for how best to approach buying our new home which will be the first nice home either of us have purchased. Does it ever make sense to take out some of her investments given capital gains tax will be the lowest it ever will be for and pay direct cash for a home? I will be maxing out all of our retirement accounts going forward, HSA, and then if anything left on top of that do additional investing.

  • #2
    Congrats on the upcoming wedding. A little difficult to give specific advice without specific numbers, but I'll give my $.02. When you say "pay direct cash for a home" do you mean using some of her investments to purchase a home in full with cash? Mortgage rates are at their historical lows so I wouldn't forego the cheap debt if that's what you mean, especially with the high credit scores.

    How much equity is in the current homes? Assuming you two will be selling your respective homes to buy a new one, so I would take into account what proceeds would come from those.

    What does your cash flow look like with your current salary? My first impression would be to A) sell both homes/save what you can from your jobs for a downpayment, B) sell one home while living in the other and continue to save for a downpayment.

    Liquidating any long term investments would be an absolute last resort for me.


    • #3
      If you get married by 12/31 then you'll most likely want to file married filing jointly for your taxes. I would put down as little as possible for a home in this current environment.


      • #4
        mortgage is almost free cash these days that won't be around forever. If I were just starting; 30yr fixed with 10% doctor's loan