Buying Home Cash vs. Mortgage vs. Cash then HELOC

[Earl Richard]

Hey everyone!

I have a question regarding the best way to purchase a new home for my family and I (which we intend to live for at least 7 or so years, possibly much longer). I am in my mid 30's, this is our first home, and my yearly pretax income about 500k. I have about 515k in the bank, 100k in an index fund (which is liquid), 60k in retirement savings. My wife has about 30k in the bank, 150k in a liquid saving account. We are purchasing a new home for 470k in a small town in the south, with very few renters. We have no debt and already bought most of the furniture and stuff for the home.

Our initial plan was to get a mortgage after putting 70k down, for 400k, 15 year fixed at a rate of 3.75%. I was just thinking of other options and what you all might think. I considered just buying the home cash outright and that's it. It would avoid closing costs and and paying the interest. I also think our income is to high to have any tax benefit for paying interest every year. We would still have about 100k in cash for emergencies, etc. and the income coming in from working. The other option would be buying the home cash, and potentially taking a home equity loan, either initially or if we ever felt we needed to. The other benefit from buying cash is that we could move in earlier, as we have a newborn and it is the holidays. I also might invest only a fourth or so of that money currently in the bank, especially in this volatile market so it won't gain or lose much value. The downsides would be that we would have less cash on hand for emergencies (but still plenty), and the process of purchasing the house would be mostly on me, and not something we do together as a couple as my wife really can't put much towards the purchase. We were just going to split the mortgage payments 80/20, together!

Thoughts?