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How much of my net worth should be in my house?
Main Post:
Hi all,
So I'm saving to buy a house in cash. My estimate is that within 5 years I'll have about 200-300k saved. I don't want a mortgage, full stop.
My question is when I finally do save that much, and if my income continues to be about 80k per year, is there a massive risk to putting about 90% of my net worth into my house? Are there any specific risks I should be aware of? My plan is to have about 20-30k aside for maintenance etc.
Edit:
Thanks for the insights everyone, really interesting to get different opinions and much appreciated. For those asking there are a few reasons I don't want to get a mortgage, call me stupid if you want. But that's also why I'm asking for everyone's opinions so these aren't set in stone, just my current thoughts:
I have a (some would say healthy, some would say irrational) fear of debt due to personal history
The nature of my work is that I might have some big payoffs within 5 years but then uncertainty after that, so I don't want to commit to a 15 or 25 year payment that I'm unsure I'll be able to make
I think it would feel really damn good to never pay rent again and not be paying interest to a bank
It would make the homebuying process easier and I am very lazy when it comes to that stuff
Edit 2:
Okay thanks everyone, I get it, I will be looking into different mortgage options with shorter terms. I suppose I should've expected this reaction when I said I don't want a mortgage full stop, really what I meant was that it's irrelevant to the question I'm asking, but I also see now that I was wrong about that and it's all too tied together to separate that out.
I wouldn't say I'm financially illiterate but I'm certainly learning, so for those of you who were polite and constructive in your replies I really appreciate all this info, thank you.
Top Comment:
Well this is why even rich people get mortgages... because then you're not putting all of your liquid net worth into an illiquid asset. You can then use the rest of your money to diversify into other assets whether stocks and shares, cash, etc - and the general hope is that those investments will beat the interest of the mortgage making it not only a better spread of risk, but also more financially beneficial.
WoWAuctions.net, Hardcore Auction House Browser! : classicwow
Main Post: WoWAuctions.net, Hardcore Auction House Browser! : classicwow
Zero Energy houses. What do y'all think about these houses and if they work as they say why haven't they caught on?
Main Post: Zero Energy houses. What do y'all think about these houses and if they work as they say why haven't they caught on?
Top Comment:
A bunch of reasons.
- Innovative building materials and methods are typically used for new construction, not retrofit of old construction. There is a LOT of existing home inventory. You're not going to see people bulldoze functional homes to build net-zero homes for a small utility savings, so you'll see these homes primarily in new developments farther away from city cores.
- Expensive. Hypothetically, if it cost me 20% more on the purchase price of my $400K home to buy a net-zero home (which seems about right, but it's obviously hard to compare apples and oranges) that would add $20K up front to my 20% down payment (forgoing around $100 a month in perpetuity in interest/investment returns on that $), and then about $280 per month in additional mortgage payments on the remaining 80%, more than my utility bills in every month out of the year.
What was Mr Houses networth?
Main Post: What was Mr Houses networth?
Top Comment: I don't think anywhere in the game ever says, but since Mr. House is based on Howard Hughes I'll just go from there. Howard Hughes' net worth was $1.5 billion when he died, or $6.31 billion in today's money. How much inflation occured in the Fallout universe has never really been explained, but we see that magazines were $40 in Fallout 4. Given a magazine today costs about $3.50, this is about a 1042% increase. So applying that to the $6.1 billion in today's money, we get around $67 billion dollars in pre-war money.