How to Money · Monday, September 7, 2026
Hosts Joel and Matt discuss a listener, David, who earns approximately $400,000 net annually and is looking to purchase his neighbor's house. They explore strategies for down payments, mortgage rates, and the trade-offs between investing in the market versus paying down debt, emphasizing risk appetite and personal financial goals.
“And so I think this comes down largely in my mind to, do you want to put down a smaller amounts and have more of your money with the ability to invest in the market that could see potentially higher returns than let's say a six and a half percent, right? So it's not guaranteed it's potential, but it has the potential for it to be big. Or does he put down a ton of money, um, in order to get the guaranteed, essentially the guaranteed rate of return of let's say 6.5% by putting more of his dollars into the mortgage, more of a down payment in order to lower his borrowing costs on that property. So that's one way to think about it.”
“One of the other things he could consider doing, Matt, is renting out the house he currently lives in whether he's renovating or doing something to the home next door, buying that as a personal property and living there for a couple of years, right? At least, and doing some renovations to that. That could be a really savvy way to approach it.”
“And I think you could say that a lot more confidently, right? When interest rates were closer to the 3% range, you can't say that nearly as confidently in 2026. And so I would just be wary saying, I'm going to take on extra debt and I'm just going to invest more because it could lead to a liquidity problem. And you might not come out ahead in the next decade if you take that approach.”