[USER]

To pay off or not to pay off new home purchase.
Current home value at 485k, 100k loan balance. Payment on p&i is approx $550 with 3.5% rate.

Home we put an offer on at 800k, will put 500k down from our MM account that we have had earmarked for a new place.

Loan w closing costs etc will be 320-370k depending where negotiations land.

Payment approx 2000 on p&i at 7.5%
That gives/ leaves me with 150k in our HYSA that we plan to spend 50-60k of which will go towards some changes in the new place.

When we sell the old place after a few months we will have approx 300-325k equity.

We can then:
-Pay off the new loan in entirety
-Pay it down to approx the current balance we have and recast for a 100k balance at 690/ month p&i
-Pay it down to a midway point etc and have 1300/ payment p&i

Currently:
1.2m in a after tax brokerage
70k and 40k in respective Roths
40k in both out Simple IRAs
645k in the MM with 500k-500k earmarked for the house deal

All four retirement accounts will continue to get maxed if we keep the lower house payment option – approx 55k a year.
We own an S corp business, 3 residential and 1 commercial properties.

W2 wages with a corp spillover and rental income puts around 220k AGI and 150k taxable income. No consumer debt other than a couple company vehicles.

Commercial propert is paid off and we rent it to the business, the rentals have approx 300k worth of loans but are under 50% of value.

I see no reason to pay them off for tax reasons.
The original question is what do we do after the current home sells with the equity?

I’d like to have 100k or so as an emergency fund in the end.

Thank you

[Scott]

The odds you will beat the spread at 7.5% are not going to happen anytime soon. I’m in the exact same boat and I plan on paying mine down and recasting at a minimum.

as soon as my current property sells.

Then I’ll relook at the climate, and most likely pay it all the way off.

If rates ever get back to 5ish. I’ll just cash out refi.

[Jill]

Pay it off. There’s so much uncertainty right now. My house is paid off. I just got news I will be laid off in December. My daughter is getting laid off in June.

My spouse’s job is at risk if things continue to decline.

We’ll look for new jobs and I’m sure find them but if we don’t, we can survive.

If I still had a house payment I’d be freaking out.

[Alex]

I speak for myself. Paying off my house allowed me to take more risk and feel peace no matter if the market dips 50%. Everyone have different risk tolerance.

I’m a bit conservative.

If you like risk probabily going to have better returns.

For me happines is not about having many things, I dont like to be in the rat race, but everyone is different.

[Author]

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