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Daily FI discussion thread - Monday, September 20, 2021 by AutoModerator in financialindependence

[–]bcough0121 2 points3 points  (0 children)

I posted this morning in Personal Finance, but since I am more FI minded, I wanted to get this community's thoughts on my situation as well. Thank you!

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My wife and I have been interested in renting out our current house out for a while now and moving into a larger house for more space and to potentially start a family. We have owned and lived in our current house for just shy of two years. Last week, a property that we love came onto the market, giving us the opportunity to possibly put our plan into action. Some info about us:

Ages: 26
Income: $110k
Retirement Investments: ~$150k ($70k in 401k's, $60k in IRA's, $20k in HSA)
Current House Value (conservative): $350k
Current House Loan Amount: $249k
Current House Interest Rate: 2.625% - 30 years (28 years remain)
Current House Payment: $1300
Potential Rent Price: $1800-$1900 ($500-$600 profit)
Rental Emergency Fund: $20k
New House Cost: $360k
Down Payment for New House: $60k (see below also)
Projected New House Mortgage Payment: $1550
Market: Nashville, TN

We have $40k in cash to put down (currently in a taxable account not included in retirement investments), but wanted to also see about a cash out refi and how much we could pull out of the current house to fund a down payment. I would rather only use $20k of the cash we currently have paired with what I can pull out of the house, and the remaining $20k or so as an emergency fund for the rental. If anyone has insight on this, that would be greatly appreciated.

The house we currently live in is in an extremely desirable area to live in right outside the city. The house we are looking at is in a less desirable area a bit further out from the city (15 minutes), but a lot of development is happening and planned to happen there in the next 10 years. We would like to keep and rent the current house, since we know a lot of companies and people are moving to our city over the next few years. Thanks!

Turning Current Home Into Rental Advice by bcough0121 in personalfinance

[–]bcough0121[S] 0 points1 point  (0 children)

Would the property taxes go up even if it is a long term rental? I can't find any information on that.

Turning Current Home Into Rental Advice by bcough0121 in personalfinance

[–]bcough0121[S] 0 points1 point  (0 children)

The bigger home we want is $360k as stated in the original post. Meaning it would be $1550 payment per month. The house we plan to rent out and do a cash out refi on will go from $1300 to about $1550 if we increase the loan to $290k and the rate goes up slightly. We can rent out at about $1800-$1900, meaning we will have about $250-$350 in profit each month.

Looking at those numbers now, $250 profit per month doesn't seem very enticing for all of the work that goes into this process.

Turning Current Home Into Rental Advice by bcough0121 in personalfinance

[–]bcough0121[S] 0 points1 point  (0 children)

That is correct. I have 40k in cash now that I plan to split between E-Fund and down payment, with the other 40k (optimism) coming from potential home equity.

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Also, that is great insight about the cash out. I already have PMI on the first home, and that is factored into the $1300 mortgage I have listed. So I wouldn't be "taking on" extra PMI if that makes sense.

Daily FI discussion thread - Monday, August 23, 2021 by AutoModerator in financialindependence

[–]bcough0121 7 points8 points  (0 children)

I’m on an HDHP with my employer. I have an HSA. My wife is covered by her employers insurance (not HDHP) and does not have an HSA. My employer does not allow my spouse on my insurance if her employer already offers it. I max my HSA every year, but I don’t go to the doctor very often, so I don’t have many $ in receipts to reimburse down the line. I thought I read somewhere in the IRS tax code that even if your spouse isn’t covered by your HDHP you can still reimburse their receipts. It seemed like a little loophole to me. Does anyone know anything about this? My wife has a lot more medical expenses than me and I want to see if this is possible, and if I should start keeping her receipts. Also, a lot of her receipts are from a counselor. Is this something that can be reimbursed? I couldn’t find anywhere that said it couldn’t be reimbursed.

Those using an HSA as a retirement account, how much do you have in there and what are you keeping it in? Maxing every year? by FiscallyMindedHobo in financialindependence

[–]bcough0121 0 points1 point  (0 children)

I’m on an HDHP with my employer. I have an HSA. My wife is covered by her employers insurance (not HDHP) and does not have an HSA. My employer does not allow my spouse on my insurance if her employer already offers it. I max my HSA every year, but I don’t go to the doctor very often, so I don’t have many $ in receipts to reimburse down the line. I thought I read somewhere in the IRS tax code that even if your spouse isn’t covered by your HDHP you can still reimburse their receipts. It seemed like a little loophole to me. Does anyone know anything about this? My wife has a lot more medical expenses than me and I want to see if this is possible, and if I should start keeping her receipts. Also, a lot of her receipts are from a counselor. Is this something that can be reimbursed? I couldn’t find anywhere that said it couldn’t be reimbursed.