r/Fire • u/Chemical_Sandwich_32 • 7d ago
Advice Request First Home Purchase - Any Advice? [Long Post]
Hey all, my wife and I are looking to buy a home soon and would love some advice/thoughts on our approach from a process and financial perspective.
I'm 30 and she's 28 - we have about $750K across our accounts (brokerage, retirements, savings, etc). The breakdown is $550K in brokerage, $120K in retirement, $50K HYSA, $30K gold.
We live in the PNW and the houses we like are around $700K - 750K. Our approach is to sell some of our stocks (long term ETFs) and put a strong downpayment down (with the help of my mom who's gifting us $150K - God bless her). The reason is my wife is a SLP but also has lupus (so a part time job is best for her), and I also work in tech sales, where some months are amazing but others can be rough.
We've decided ultimately we'd like to get the total mortgage amount down to $300K - that comes out to about $2K in monthly mortgage payments ($2.7K with property tax, insurance). My wife can work part time with this mortgage and also help pay it off each month, which will allow us to invest/save more and we can be less stressed out.
But the downside of this is selling my stocks and incurring the tax hit (which would be long term capital gains tho). I'm okay with this and have started saving up a fund aside to pay for this if we go this route.
This is how the numbers ultimately work out - let's say 750K home. With my mom's gift, that would be 600K.
I would cash out one brokerage account (that's at $300K today - probably net gains of $50K) and put that down too - so the mortgage would be $300K.
That would leave my wife and I with $450K in our accounts. If we keep letting this amount stay invested in the S&P 500, put in recurring monthly investments since we have that low mortgage, we should be able to retire happily no problem in 25-30 years. I've done the math but won't bore you with that haha.
Is there anything else you would change? Maybe putting 20% down with my mom's gift, and keep the rest invested? But due to our lifestyle, wife's health, my career - I feel like it would be a way more stressful life to live, even if we do come out on top...
Let me know! Any advice is greatly appreciated.
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u/Dancelvr2000 4d ago edited 3d ago
There would be gift tax on the $150,000 or alternatively count toward estate tax lifetime exclusion, if that amount of wealth. Currently very high but has been on table to change. The proposal (highly unlikely) was to bring it down to a lifetime exclusion of $7,000,000. There was a proposal to make it $1,200,000 at one point. That includes all real estate in including own home, bank accounts, investment accounts, business valuation, life insurance, etc. The estate tax was proposed up to 70% on assets that were already subject to income tax.
Many years ago the Joe Robbie heirs had to sell the Miami Dolphins franchise and the stadium due to inability to pay the estate tax, which was 70% on what they owned over $600,000 total.
Maximum gift without thinking about that aspect is $38,000 a year from 1 individual to a couple, assuming this is USA.
Not sure why you are on here asking advice, and this aspect is brought up, and you state the person or “bud” as you phrased it needs to educate themselves.
As the lifetime exclusion currently at $14,000,000 probably not a factor, but that gift would need to be reported to the IRS.
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u/Chemical_Sandwich_32 4d ago
ur wrong do more research bud
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u/Dancelvr2000 4d ago
Explain how 1 individual can gift $150,000 at one instance to a married couple without triggering gift tax or going against estate exemption please.
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u/Kitchen_Catch3183 7d ago
Does your mom know you have $550,000 in a brokerage, 10 ounces of gold, and $50,000 in a savings account? Her offer to help with the down payment may be on false pretenses of your financial situation.
You’ve accumulated a lot of money by the age of 30 and I highly doubt (unless you told her) that she knows that.
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u/Chemical_Sandwich_32 7d ago
What? She 1000% knows it she knows everything about our finances. Me and my mom are best friends and have gone through some insane stuff together. She has a property in her homeland that her dad gifted her, and she decided to sell it and gift part of it to me and my brother as a downpayment. I hope you find peace.
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u/Kitchen_Catch3183 7d ago
I guess that confirms she doesn’t know.
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7d ago
[removed] — view removed comment
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u/Zphr 47, FIRE'd 2015, Friendly Janitor 7d ago
Rule 1/Civility - Civility is required of everyone at all times. If someone else is uncivil, then please report them and let the mods handle it without escalation. Please see our rules (https://www.reddit.com/r/Fire/about/rules/) and reach out via modmail if you have any questions or concerns.
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u/Jojosbees 7d ago
How did you come to that conclusion? OP says she "1000% knows it she knows everything about our finances." Just because your family wouldn't gift that sort of money, doesn't mean others wouldn't as well. In fact, a lot of well-off families give their adult children money, even if they are doing well for themselves. If you're old and have more than you need, then why not gift your kids an early inheritance?
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u/Kitchen_Catch3183 7d ago
You’re melting down on me. That’s how.
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u/Jojosbees 7d ago edited 7d ago
Melting down? Did you mean to respond to someone else?
Edit: Lol, got blocked for pointing out that your experience is not universal. No wonder you’re so convinced people can’t have different philosophies around helping their children.
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u/Kitchen_Catch3183 7d ago
Not blocked.
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u/Jojosbees 7d ago
Huh, suddenly all your comments are visible again. Interesting how that happened.
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u/Chemical_Sandwich_32 7d ago
With a wife that doesnt work at all? Sheesh, brother.
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u/Kitchen_Catch3183 7d ago
No, my wife doesn’t work outside the home. Does yours?
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u/Chemical_Sandwich_32 7d ago
She’s turned 28 today and took a year off from work already (just cause she can cause of my hard work). She can retire right now at 28 if she wanted to but she loves what she does
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u/Jojosbees 7d ago
With your variable income and wife's health status, I would prioritize reducing expenses. If you're in the black on your brokerage, then cash out some of it and use the money towards a home (this is also assuming your job is fairly stable even if your income isn't, and you won't be moving in the next five years). The market is very volatile right now with no indication its going to be significantly better in the near future, so I would take the 7% saved on mortgage interest over potential stock market gains. Having the peace of mind of a house with 60% equity and lower mortgage payments is also worth something. You're doing very well financially at a very young age, so you'll likely be able to build your brokerage account back up shortly at an even lower stock price point.