Selling house - proceeds options

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aim.high
Posts: 5
Joined: Wed Oct 20, 2021 7:24 am

Selling house - proceeds options

Post by aim.high »

We are closing on a new house in a couple of weeks. We have secured a 2.65% 30-year mortgage with 5% down. We are listing our current home in a couple of weeks. When it sells we will have a cash windfall equal to 90% of our new mortgage balance.

I am considering options on what to do with the proceeds from selling our current home.
  • Put it in a low-interest savings account. Add to it and then pay off the mortgage in full once it is large enough.
  • Invest it in some type of bond fund and pay off the mortgage over time.
  • Take on some additional risk and invest in something like Wellesley and pay off the mortgage over time.
  • Some other option?
Here is our personal situation.
  • The new mortgage will be our only debt.
  • Excluding the cash from the sale of our current home, we have a stock portfolio equal to 125% of the mortgage balance spread out evenly over ROTH, 401K, IRA, and taxable accounts.
  • We are 55/57. I have a secure, high-paying job and decent work-life balance.
  • Annual expenses apart from the new mortgage are 25% of take home pay.
  • Annual expenses with the new mortgage are 37% of take home pay.
My thinking is that with interest rates rising, it may be possible in the near future to get a risk-free return greater than the 2.65%, or over the term of the mortgage get a low-risk return much greater than 2.65%.

I'm open to suggestions.

Thanks,

Aim High
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