Buying a House with a Robinhood Margin Loan
This may sound stupid but let me make my case, I'm looking for feedback.
I work remote in a LCOL area, which has put me in the position where I am *almost* able to make a cash offer on a house with my savings. Based on the houses I'm looking at (240-260k range), my liquid cash puts me at about 75-85% of my expected purchase price after closing costs. So I'm deciding between a traditional mortgage OR taking a $40k margin withdrawal from my Robinhood account. The margin withdrawal would represent about 20% of my current RH account value, and I would plan to add cash pretty aggressively to eliminate the margin in a little more than a year hopefully.
Preapproved for a mortgage rate of 5.875%
RH margin loan rate: 4.5%
I estimate that I'll save ~$4k in closing costs with a cash offer by avoiding origination, appraisal and other mortgage fees. The cash offer would also give me better negotiation leverage on purchase price, but according to my realtor that's pretty dependant on seller and hard to quantify, so I'm ignoring that for now.
I could of course get margin called, but only after my account value dropped over 60%. I'm invested in S&P500 funds so I find that unlikely but not impossible to happen in the near future.
I'm sure people will ask, why not just sell the stock in RH instead? I'm also considering that, although I'd rather not interupt the growth, and I would pay a lot of capital gain, much of it short term, and I'm in a high tax bracket. The minimum tax hit would be about $6500.
What do you guys think, am I missing anything? What would you do, mortgage, margin, or sell stock?