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There are also intangibles like
Not having a mortgage payment
Having a large chunk of cash available should you need it
etc etc
You might find that they are close enough that it makes sense to just do whatever leaves you feeling the best (money or no mortgage payment).
You might find that its easier to rent. You can always take your time and gives you lots of freedom to move, downsize/upsize etc. You aren't responsible for the upkeep on the place etc. You can see how it fits and take your time looking for a place to buy and thinking about how much you want to put down on it.
I will say this. If it ever made sense to keep your money and get a mortgage its now. The interest is crazy low by historical standards.
I don't know the first thing about reverse mortgages...I just see them advertised on tv. They look sleazy as hell to me. Maybe I am wrong but I wouldn't touch one with a ten foot pole without a lawyer going over the paperwork in detail and fully comprehending what one is. There is a reason they are offering to pay you money....they aren't doing it to lose money, so if they must be making money at your expense is my common sense reasoning for not doing one. I might be wrong and maybe someone who knows something about them will chime in.
I know everyone says get a mortgage, the rates are so low. But the facts are, no matter how low, you are STILL paying hundreds of dollars every month in interest. And Dave Ramsey talks about the risk factor. What if something happens to your income stream? You still have a mortgage to pay, no matter how low the interest rate.
Im working on no mortgage payment when I finally quit working. It just makes life that much simpler, and needing that much less money to be able to live on. Maybe to a lot of people its not significant, but not having to pay an $800 mortgage payment will be significant to me when I retire.
I know everyone says get a mortgage, the rates are so low. But the facts are, no matter how low, you are STILL paying hundreds of dollars every month in interest. And Dave Ramsey talks about the risk factor. What if something happens to your income stream? You still have a mortgage to pay, no matter how low the interest rate.
Im working on no mortgage payment when I finally quit working. It just makes life that much simpler, and needing that much less money to be able to live on. Maybe to a lot of people its not significant, but not having to pay an $800 mortgage payment will be significant to me when I retire.
Most people that have the cash to pay for a home but opt to carry a mortgage are counting on the fact that they can make more than the current 3.5% APR charged by the bank.
Most people that have the cash to pay for a home but opt to carry a mortgage are counting on the fact that they can make more than the current 3.5% APR charged by the bank.
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.
More info: the $150,000- $170,000 would be from the sale of current home. There is some, but little savings. Just SS and pensions, plus Hubbie has some $ in a deferred compensation plan. Since we have time to think about it yet, we are considering the Tarpon Spgs/ Dunedin/ Clearwater areas-esp. Dunedin and maybe Venice/ Punta Gorda areas. Or, on the other side- Ormond Beach and St Augustine. But we are leaning towards Dunedin.
I know many people think 150-170k will go far here in Florida.Currently I live between Dunedin and Tarpon Springs and know the market pretty well. Unless you are thinking of a small condo you will not be able to buy much in that 150k-170k price range...you will need a mortgage...anyplace in Florida...(for the most part) where $170,000 buys you a nice home trust me it won't be in a nice area...
You need financial advice. I suggest you consult a professional financial planner who can look at all of your income and debts and come up with a holistic strategy for you. It would be darn well worth it and I'm betting much more accurate and relevant to your situation.
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.
hi countrykaren, I think its time for research for a good mortgage. I believe both of you have very good credit score and definitely you guys can expect very nice offers from lenders. My recommendation is that go with a Mortgage broker so that you guys can select best offers from different lenders. Try to consult an experienced Mortgage broker. Adopt a bargaining approach.
I used this tool to check my financial status with the mortgage. Hope this will also help you to calculate your mortgage affordability. Try to use sum up both of your income and use it in this mortgage affordability calculator Mortgage Affordability Calculator Alberta | Canada Mortgage Direct
Last edited by borisdavenport; 05-18-2016 at 04:51 AM..
Most people that have the cash to pay for a home but opt to carry a mortgage are counting on the fact that they can make more than the current 3.5% APR charged by the bank.
Most retirees are adverse to risk and trying to find better than 3.5% return has some risk.
We are in a similar position. We decided to pay outright for several reasons.
We have the money and don't see anywhere better to put it.
We will still have substantial liquid assets should we need them. A house is NOT liquid and I would never recommend anybody leave themselves in such a vulnerable position. Sounds like the OP would be in this vulnerable position.
You have to factor in closing costs. Most origination fees are at least $1,500 plus all the attorney fees (which are still needed with all cash transaction)taxes and insurance collected upfront for escrow. Mortgages are expensive even "a small one".
We looked at all these factors and decided for us paying all cash was best but each buyer has to take into considerastion what is best.
BTW I agree I have always heard reverse mortgages are extremely sleazy and very risky. But I remember reading recently they have improved. Remember--there is no such thing as a free lunch.
Not sure if you’re still even reading this string but….
Another option most older americans are not aware of is the availabilityand flexibility of a reverse mortgage for purchase (also called HECM forPurchase or H4P). Know your options. It’s different from getting areverse mortgage on an existing home. I also believe they are easier to qualifyfor than a normal mortgage. Reverse mortgages have become much safer in recent years
As opposed to buying a new home with all cash, or taking a conventional mortgage with a mandatory monthly payment, you can purchase a home with a reverse mortgage. This enables you to buy more house with less money out of pocket, but you now have more repayment options over a conventional loan. Flexible payment options as you age and your life circumstances change can be a huge advantage.
A reverse mortgage for purchase gives you the option of making a mortgage payment in any amount at any time, or to never make a payment. For example if your husband is working, you can make fully amortized payments and pay down the loan like any mortgage. One day your husband retires-you could start making interest only payments. God forbid something happens to one of you and you lose pension and/orsocial security income? you now have the option to stop making mortgage payments for the rest of your life
Payments on a conventional mortgage may be manageable now, but what about when you’re in your 80’s?? your cost of living will be higher, will your income?? What if the stock or housing market tank? What if a pension fund dries up? What if social security dries up? What if you all of a sudden need expensive medication but are locked into a large housing payment??
As long as you pay property taxes, insurance HMA dues (if any) and maintain the home- you can never jeopardize not having a roof over your head because the mortgage payment would never be mandatory. Worst case scenario you don’t make payments and your loan balance rises. Best case you pay the loan back exactly like the conventional mortgage you’re also considering.
Verify with a pro- but I believe if you’re making payments you’ll get the tax deduction each year. If you don’t make payments, you (or your estate) get the write off when the home is sold or refinanced and the interest is actually paid.
VERY ROUGH example (assuming no closing costs, agent fees, Floridatmtg taxes, ect) a 66 year old would qualify for about 55% of a home’s value with a reverse mortgage. So if you were to buy a $250,000 home with a reverse mortgage for purchase, theH4P would lend you roughly $137,500. You would put down the other $112,500 in cash.
I’ve read fixed rates on this program range between 4.5%-5 and you can finance 100% of the closing costs. There are no pre-payment penalties and you can sell or refinance at anytime. The home is always titled in your name and your heirs have the option of keeping or selling the home at the end.
Just some food for thought…
Last edited by anicon; 06-04-2016 at 09:31 AM..
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mortgage affordability calculator
