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Old 06-04-2016, 09:45 AM
 
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Quote:
Originally Posted by countrykaren View Post
Hubbie and I will be retiring, and trying to get all our ducks in a row and will ask the age old question that has been asked many times before.


Anyway, we are considering Florida, selling our home in NY. WE both will have a pension (mine is small) and Soc. Security.


The question is this: should we have a mortgage?


After selling our home here, we would be able to buy a small home in the $170,000 range. But sometimes the cheaper homes are in not so nice areas (occasionally they are) and possibly needing some TLC (again, not always).


Or should we take out a mortgage (approx. $100,000), buy a nicer home and have the tax deduction?


I've heard the stories that at least with no mortgage the house is yours, and the story about if you are a senior who cares if you ever pay it off (we are in our 60's), and the one that why should you tie up your money in a house, use someone else's money.


I'd like some thoughts. This should be our last home- next stop would probably be a nursing home somewhere down the line. Thanks.


Would you even get a tax deduction for owning a house? In Florida you will not have state income tax so if your itemized deductions do not exceed the standard deduction there is no tax advantage to owning the house. Additionally your tax savings may be very limted if your itemized deductions are a little higher than the standard deduction
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Old 06-05-2016, 09:49 AM
 
Location: Stuck on the East Coast, hoping to head West
4,640 posts, read 11,903,321 times
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Just another thought, but I know retirees who have trouble qualifying for any mortgage if they don't have a job. For them, its not a choice; they have to pay cash.

Alternatively, my husband and I plan to retire within 3 years. If we decided to buy, we will probably buy the house prior to leaving our jobs.

Regarding mortgage interest: this is an entirely different situation than when you're just starting out.

I agree that you should talk to a CPA or financial planner and also an asset protection attorney.
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Old 06-05-2016, 03:33 PM
 
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we have multiple 7 figures in our portfolio but because we are delaying taking social security 3 banks said it is a coin toss as to whether we can get a mortgage or not . we will just pay cash if we buy a co-op .

the reason is the mortgage buying agency's have strict income requirements and do not like to see money that is dependent on markets and under your own control .

they accept social security ,pension , annuity , rental income .
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Old 06-05-2016, 03:36 PM
 
106,236 posts, read 108,237,907 times
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Quote:
Originally Posted by emm74 View Post
Yes, if you have the cash on hand and want to invest it and beat the interest rate you are paying (most people are paying more than 3.5% though) and if you have income to take advantage of the mortgage interest tax deduction, it can be worth it at least from a pure dollars and cents standpoint.

But just like the decision between owning and renting isn't just pure dollars and cents, I think having a paid off house is the same - for me, knowing that I won't have a rent or mortgage payment in retirement is a huge source of emotional relief. Yes, I'll have RE taxes and an HOA/condo fee and some maintenance costs. But they will be less than rent would be, and no one can kick me out of my home like they could with a rental. And I can paint or remodel or do whatever I want. And eventually, it will be an asset to leave my son.
unfortunately in retirement if you are living off your portfolio you have two issues trying to beat the mortgage interest via investing .

you have to beat the return the same as always but now that you are spending down that return has to be in the right order of gains or losses . it isn't enough anymore to just get a better average return , now sequence risk plays a big factor .

it can be much harder to beat that interest in retirement compared to when you had a steady pay check paying that mortgage . the rules of the game change when spending down .
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Old 06-07-2016, 04:53 PM
 
948 posts, read 915,819 times
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I'd forego the mortgage and pay with cash. Living mortgage-free is less stressful. This is especially important if you buy in an overheated market, like many cities in Florida. If you buy a house with a mortgage in an overpriced market, you could end up underwater in a couple years. It would be safer to pay with cash.
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Old 06-07-2016, 04:57 PM
 
106,236 posts, read 108,237,907 times
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i don't know if i agree that losing my money is better then losing opm .
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Old 06-07-2016, 08:49 PM
 
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I would say pay cash for the house if you can afford it. I just paid off my mortgage and feel an enormous sense of relief. The money that I was putting towards my mortgage, is now being used to max out my 403b, and to build up cash reserves in cash of an emergency. Good luck whatever you decide!
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Old 06-08-2016, 02:49 AM
 
106,236 posts, read 108,237,907 times
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the problem with funding the investments after a mortgage is paid off is the most valuable asset when investing in equity's is time .

you lost decades of growth generally and you can't get that back . so while yes you can add money it gets harder to grow that money when you have less time .

but if that is how you need to do it it is still better then not doing it .
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