Tip on purchasing a home

Discussion in 'Trading' started by Sky123987, Sep 20, 2008.

  1. There is this home that costs x. You have y dollars which is > than x, and y - x will allow you ample $ to trade with spend etc.

    Do pay the house in cash or take a mortage?
  2. You should ALWAYS take the mortgage. Unless of course, you plan on losing all of your money in the markets. In that case, pay cash for the house.
  3. RAY


    As long as your disciplined, take the mortgage, put 20% down.

    Mortgage money is cheap money. If you are a trader or investor you would like to think that you can beat the cost of mortgage.

    You can write off the interest of the mortgage (primary residence).

    You can always pay off the mortgage, at a later date, if you have the money an choose to do so.

    Not sure of your credit (vs. income etc.), but it 'can' help with your credit.
  4. ElCubano


    id pay the house and then try to build up what u have trading ( peace of mind ).....the first 5-6 years of a loan go to pay most of the interest anyways....so for 5-6 years you are a paying a mortgage that doesnt bring the principle down much...

    i know taking the loan is better if you can produce more than the interest on the loan...but that isnt always the case...peace
  5. ggoyal


    r u ray lucia?
  6. Put a little more than 20% on home and take a morgage.(fixed rate) Now you eliminate private morgage insurance (savings)
    Trade with the money you have after 20% down payment ,but keep some for security.
    If you do well trading, start to make payments on principle of morgage(interest savings)
    Now you are buying a home, saving on the interest of that home, but still allowed tax write off for the morgage, and have cash for a security, building equity, being responsible.
  7. While I do understand and respect your theory, OP says even if he pays cash for his house he will have ample capital to trade with.

    To those who argue that mortgage interest is tax deductible, it's not always; only over a certain amount. Even then, for every $1k you spend in interest, if it is deductible for you, in a 28% tax bracket you only get $280 back which means $620 left never to return.

    Having a home paid for is some of the best security you can have. It also avails you the opportunity to self insure and not pay extortion rates to Warren Buffet and AIG (profit in insurance is 40% after hyper payouts to the top brass).

    If your house is paid for, you always have the opportunity to take out a mortgage if necessary.

    I have seen many investors in my life who had tons of cash yet financed all their property and when things in the market were not in their favor they sank and lost everything.

    I would say pay cash for the home and put it in a trust that does nothing hence it accrues no liabilities.
  8. ps this will not work in top of a bubble (2004-2006) :D And to buy now in Florida, California, Nevada and Arizona could be high risk.:(
  9. I guess it depends on how good of a trader you are.

  10. From a psychological perspective, I would say pay cash since you'll still have enough $ left over to trade. I'm sure having $0 payments every month is a huge psychological benefit when trading for a living.
    #10     Sep 20, 2008