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Early Retirement / Buy House with Cash OR Mortgage and invest

« on: January 21, 2020, 06:57:17 PM »

I searched and read quite a bit on this topic, however, I really appreciate the wise minds to look at my situation and provide some insight that puts me in the right direction.  I truly respect this forum's collective wisdom.

In less than 6 months I plan to Retire Early from my job. Wondering if it is better to buy a house 100% cash or go for mortgage (20% down).

Excellent credit rating, 15 year APY @ 3% and 30 years at 3.8%

$400k comes out of the taxable savings account earning 2.35%. 

Age: 44, Married with two children

Currently Renting. Relatively closer to work. High cost of living area with the highest property tax in the country.

Planning to buy a house in low cost state but not too from where I live so current friends are “accessible”.   
Brand new house priced at $400k (2,300 Sq. Ft. , already factored in for some upgrades like bigger lot for vegetable garden, moving costs and certain one time costs).

Expenses at early retirement would be $25k but we are flexible both ways.
The magic number $625k (using 4% rule of thumb) is in taxable accounts (30% tax managed muni bond index, 70% stocks index for now but will transition to ~90% to stocks over time)

ROTH, IRA’s are in good shape (don’t like to touch this for another 15-20 years, however, may take out some money from ROTH early for children’s collage in few years.

If I go for the mortgage this $400k will be dollar cost averaged into the markets (more like 80 or 90 stock index rest bond index)

Thank you, let me know if any additional information is required.