Thank you for the article. I have a slight twist on this possibility. My husband and I are both 50. We owe less than $340k on our home (with approximately 20yrs left on the mortgage with 5.25% rate) that has recently been appraised for $2M- 2.5M. Our taxes on the home are approximately $6K per year. Our household makes approximately $200K/yr and we would like to retire in 5 years or so.

My husband is of the opinion that we sell the house, invest the $2M and pay any new mortgage and retirement expenses out of the interest as necessary. The new house would cost somewhere in the $800K-1M range (secured by a new mortgage) and taxes would likely be triple or more than our current home. However, since the market historically pays approximately 10%, he believes it will still make more sense than staying in our current home and would give us stability in our retirement.

Although I am open to the above idea, I would prefer to stay in our current home and possibly do a cash-out for some home improvements (approximately $15K), and invest the rest since the 10% should out perform the mortgage interest. Should we opt for cash-out, the lender we have charges .5-1% in fees (no other fees such as appraisal, closing fees, etc).

My husband grew up very poor and is anxious about having enough to cover all of the bases and provide a pleasant retirement for the 2 of us. Which of these 2 ideas makes the most sense? Perhaps, there are other options we have not considered. Any advice is welcome.

Angela

Good idea Thomas. If you take equity from your home, you’ll be putting it at risk for the rental property. Let the rental property stand completely on it’s own.