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Old 04-03-2017, 10:12 AM
 
Location: northeast PA
811 posts, read 1,381,198 times
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My husband and I bought a "starter home" when we got married, and here we are 24 years later, still in that "starter home". We have long dreamed of a nicer. larger house in a rural area. We found our dream home and the mortgage payments would be right at the upper end of our "comfort zone". We can manage now, but we realize we'll still have this mortgage payment when we're in our 80's! We do have retirement funds, but with how the economy has been, we understand we'll probably have to work at least part-time till we die. Would it make sense to take on a mortgage now?
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Old 04-03-2017, 10:39 AM
 
28,455 posts, read 84,989,538 times
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Default Goodness!!!

Quote:
Originally Posted by odessa3 View Post
My husband and I bought a "starter home" when we got married, and here we are 24 years later, still in that "starter home". We have long dreamed of a nicer. larger house in a rural area. We found our dream home and the mortgage payments would be right at the upper end of our "comfort zone". We can manage now, but we realize we'll still have this mortgage payment when we're in our 80's! We do have retirement funds, but with how the economy has been, we understand we'll probably have to work at least part-time till we die. Would it make sense to take on a mortgage now?
Yes, it is generally a good idea to consider what might happen when you "retire" and you may decide it makes sense to never completely give up some kind of part time work BUT those things should NOT be barrier to purchasing a home with a mortgage at ANY age.

You should be PLANNING for retirement and that includes projecting how things like any pension you may have coming is going to be spent, as well as Social Security (which if you are mid-fifties now is extremely unlikely to change much as previous shifts shifts have all considered folks within 15 years of qualifying to be unfair to change the goalposts) as well as other funds you have set aside for retirement.

The relative VALUE of a nicer home may be a wise use of your housing dollars BUT you need to also do some things to ensure the things that make this home valuable now are likely to help it maintain value for the period you are likely to live in it. For example: it is important to understand that while there are people significantly older than you who may have been able to sell homes in "retirement communities" at a profit that trend does not seem likely to continue. Such communities are not as appealing to people of the generation whose parents died in such places... The same sort of logic applies to homes in "rural areas" -- projections for many such areas is frankly VERY POOR right now. Younger people seem to be much more attracted to urban areas. Health care in rural areas is suffering greatly under the framework of ACA that made it easier for consolidation in urban areas. Despite efforts to bring things like high speed internet to more people such things are not happening as rapidly as they are in urban areas.

Now if by "rural" you really mean "just a bit further out, but still a reasonable commute from good jobs" or in an area that is still very attractive because of things like vacationers and such then your assessment is rather different. People like communities which make for good "quality of life".

Having a mortgage payment is not the worst thing in the world -- the tax advantages compared to renting remain solid. In places where the combination of property taxes and mortgage deduction are both rewarded by tax advantage offsetting income tax it is hard to argue that having a "paid off" home is magically better as one needs to assess the full impact of what those deductions mean for tax bracket. It is of course a task that requires doing some projections of which scenarios are most likely but it is also more than that...
Simplistic voices will say "always better not to owe anyone anything" and while I won't disagree that the INTEREST one pays on mortgages is technically raising your "cost of living" (though if the nicer house also appreciates faster one might argue you are building equity that could be tapped down the road...) any careful analysis of what the total picture you'd have by "staying put" in a paid off house includes not just the financial aspects but also the benefits to your physical and mental health. Bluntly, if living in that more rural area makes the rest of your life happier / healthier / longer you cannot put a purely financial value on that!
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Old 04-03-2017, 10:48 AM
 
Location: NE Mississippi
25,357 posts, read 17,010,145 times
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Quote:
Originally Posted by odessa3 View Post
My husband and I bought a "starter home" when we got married, and here we are 24 years later, still in that "starter home". We have long dreamed of a nicer. larger house in a rural area. We found our dream home and the mortgage payments would be right at the upper end of our "comfort zone". We can manage now, but we realize we'll still have this mortgage payment when we're in our 80's! We do have retirement funds, but with how the economy has been, we understand we'll probably have to work at least part-time till we die. Would it make sense to take on a mortgage now?
Wrong time for a 30 year, I think.
When we were 50 we took a 15 year mortgage, and were able to retire on schedule because of that decision. If the payment difference between a 15 year mortgage and a 30 year mortgage is too much for you, then I think you are buying too much house.

I recognize that probably only 10% of buyers use 15 year mortgages, but I also see where most people cannot retire when they want to - or need to!
So at your age, I say use a 15 year. If I were buying a house now - at age 71 - I would probably use a 30 year because I'm not going to pay it off, anyway, I have plenty of cash, and I could use the extra cash some other way - a trip; a new car; whatever. But for younger working people, I say use a 15.

We have 2 rentals and a primary all paid for, and we used 15's every time.
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Old 04-03-2017, 11:02 AM
 
Location: Michigan
2,741 posts, read 2,966,188 times
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I just bought a new home last year, at age 57. I know people around here that have bought new lakefront houses at age 80, with 30 year mortgages!

Just because you buy with a 30 year mortgage, doesn't necessarily mean you'll actually take 30 full years to pay it off.

After all, you gotta live somewhere...

P.S. Adding even a little EXTRA principal monthly to the first 12 years of a mortgage, can get it paid off much faster, and you save a lot of interest.
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Old 04-03-2017, 11:05 AM
 
Location: Finally the house is done and we are in Port St. Lucie!
3,488 posts, read 3,307,895 times
Reputation: 9913
We just had built our forever home. 30 year mortgage, we are 57 (me) and 60 (husband). We know it won't probably be paid off by the time we bite the dust. We've been renting for the last 17 or so years so either way, we would have a payment equivalent to what our rent has been.

At least with this house, it is ours and we've finally settled into one place.

The nice thing about renting for all those years, we tried different areas such as city vs smaller towns. Different states showed us we really like Florida. Not to mention the different styles of house and the finishes in each. It gave us real time knowledge of what we wanted in our forever home. Right down to the color of granite. Having had Formica and other types of counter finishes, I knew that I liked the granite better.

But I digress, you have to do what you are comfortable with. I don't think that your age should be a problem.
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Old 04-03-2017, 05:58 PM
 
19,637 posts, read 20,449,048 times
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My old man has taken out mortgages in his 60's and 70's.
Gotta do what you gotta do. I say go for it.
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Old 04-03-2017, 09:05 PM
 
Location: Alaska
227 posts, read 256,394 times
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I think you could also refinance say 15 years from now, or right before you retire, and take that remaining principal and a new 30 yr mortgage for a lower payment. If I'm wrong, someone please correct me. Just having a mortgage in retirement isn't awful, it's having an affordable mortgage for that retirement income?
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Old 04-04-2017, 08:40 AM
 
5,340 posts, read 14,081,648 times
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Quote:
Originally Posted by odessa3 View Post
My husband and I bought a "starter home" when we got married, and here we are 24 years later, still in that "starter home". We have long dreamed of a nicer. larger house in a rural area. We found our dream home and the mortgage payments would be right at the upper end of our "comfort zone". We can manage now, but we realize we'll still have this mortgage payment when we're in our 80's! We do have retirement funds, but with how the economy has been, we understand we'll probably have to work at least part-time till we die. Would it make sense to take on a mortgage now?
"payments would be at the upper end of our comfort zone"

this statement leads me to believe that you should not purchase said home.
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Old 04-04-2017, 10:26 AM
 
12,016 posts, read 12,643,608 times
Reputation: 13420
Quote:
Originally Posted by odessa3 View Post
My husband and I bought a "starter home" when we got married, and here we are 24 years later, still in that "starter home". We have long dreamed of a nicer. larger house in a rural area. We found our dream home and the mortgage payments would be right at the upper end of our "comfort zone". We can manage now, but we realize we'll still have this mortgage payment when we're in our 80's! We do have retirement funds, but with how the economy has been, we understand we'll probably have to work at least part-time till we die. Would it make sense to take on a mortgage now?
Find a compromise between the starter home and the dream home, use the stater home sale to pay at least half of the next home sale, but don't go over your head so that you will have to work your fingers to the bone to your grave for a dream home. Any age is okay to get a mortgage as long as you can comfortably pay for it after retirement. If you can't make the mortgage payment with your retirement savings and social security I would say don't, Also if one of you passes away the other is stuck with the mortgage. If you can find a mortgage that costs less than renting a one bedroom apartment including PITI, then go for it.
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Old 04-04-2017, 11:29 AM
 
Location: The Triad
34,090 posts, read 82,517,928 times
Reputation: 43648
Quote:
Originally Posted by odessa3 View Post
My husband and I bought a "starter home" when we got married,
and here we are 24 years later, still in that "starter home".
So that property is almost all paid for and presumably has grown some equity too.
Good for you.

Quote:
We found our dream home and the mortgage payments would be right at the upper end
of our "comfort zone". Would it make sense to take on a mortgage now?
Not if it pushes you to the upper end of your "comfort zone". Find less house.

Ideally... something that your equity will allow enough of a down payment on
to put the mortgage payment WELL BELOW the limits of that comfort range.

Then... making a 30year amortization mortgage would still make sense.
But do so with a real plan to pay it off much sooner than that.
Like before you start SSA
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