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Old 01-23-2015, 11:37 PM
 
10,817 posts, read 8,065,019 times
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Quote:
Originally Posted by Larry Caldwell View Post
You could get the same deduction by just giving $20,000 or $30,000 (however much you have been paying in interest) a year to charity and taking a charitable contribution deduction. You would even get to choose where your money goes.
A couple of years ago, we did exactly that (invested in a Vanguard donor advised fund) primarily for tax purposes. We had no idea how much enjoyment it would bring us, that it would turn out to be one of the most rewarding ongoing experiences/activities of our retirement.
Slightly off-topic so I'll stop now, just wanted to give a to your point.
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Old 01-24-2015, 08:39 AM
 
Location: Oxygen Ln. AZ
9,321 posts, read 16,582,586 times
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We decided to live in a more humble shack and just pay cash. sleep better at night.......
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Old 01-24-2015, 09:37 AM
 
Location: Dover, DE
1,802 posts, read 3,836,000 times
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Quote:
Originally Posted by waldomer View Post
Silly me, I assumed qualifying for a mortgage would not be a problem. I was wrong.
According to a mortgage officer at a major bank we recently spoke with, a stellar FICO score and significant assets are not nearly as important as regular verifiable income. Apparently, a couple of 20 year-old's with jobs would qualify in a nanosecond, but a couple of 60 year old's with a sterling credit record and a paid off house are chopped liver.

Thanks,
waldomer

I had to laugh out loud when reading this on your post. We are currently in the middle of applying for a mortgage and in the same boat. We are asset rich and cash "poor", so to speak with very high FICO scores. We will only have the mortgage for a couple of months as we want to move directly from this house to the new one and although the agent expects this one to sell quickly, we want a fall back plan in place.

Some of the things they are asking for are asinine. When calculating the expenses they are including everything for this house as well as the new house (this one is paid off), even though we have signed an affidavit that we are selling this house and moving. I have started SS, but DH was going to wait a bit as we have been living without problems on a lower income for awhile as he still works part time. But in order to get approved they first said that we needed to pull out $1600 per month from one of our investment accounts. Now they are saying that, due to re-calculation, isn't good enough, we have to pull out $2000 instead! What? Two people from the same firm can't calculate something and get the same answers??? Of course they are demanding that we show them statements from both the investment account as well as the checking account showing that the money came out and went in. Of course we only have to do this for a month or 2 and then we can stop it, but come on!! And even though we explicitly told them that this was a very temporary measure, the account that it comes from had to have at least 36 months worth of that amount coming out! After spending hours getting things done I was about ready to ask them if they wanted our souls, or at least some blood. Totally ridiculous.

Good luck! Maybe you might want to try what we did and just take a couple of months from your investment and then after the new house closes just stop the disbursements. Once we have check in hand from this house the mortgage will be immediately paid off and any monies left will go back into the account from where the disbursements came.
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Old 01-24-2015, 09:48 AM
 
Location: Idaho
1,454 posts, read 1,155,436 times
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Quote:
Originally Posted by Blondy View Post
Its not necessarily bad to pay off your mortgage. ....
In your case, it might make sense to pay off your house if it means not taking money out of 403b funds before you are required to. That's just more money to pay taxes on and depending on your situation could make your social security taxable or more of it taxable.

Everyone's situation is different and you really have to run the numbers for your own scenario.
My sister paid cash for her retirement home by withdrawing money from her 401K. She did not realize that the withdrawal amount was counted as her income. This reduced her SS payment & she had to pay taxes on it.
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Old 01-24-2015, 09:51 AM
 
Location: SW MO
23,605 posts, read 31,487,261 times
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In 2009 my wife and I at ages 61 and 63, respectively, were pre-approved for the size VA mortgage we asked for from our bank to purchase our retirement home based upon her pension and mine and my Social Security. Pre-approval took about 20 minutes online and with one follow-up phone call. The following year my wife also began drawing early SS. In 2013 we refinanced at 2.25% and it was a piece of cake. Our mortgage payment, including impounds, is roughly 12% of our net income.

While I understand that credit requirements are tighter now than they were in 2009 it seems to make sense to shop around for funding.
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Old 01-24-2015, 01:46 PM
 
Location: Forests of Maine
30,684 posts, read 49,455,573 times
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Quote:
Originally Posted by waldomer View Post
...
So my question is, how did all you retired sun-seekers get into your new digs?
We sold our previous homes, used the cash to buy land and build here.

We no longer need the mortgage interest tax deduction as our income as a lot less now.
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Old 01-24-2015, 05:18 PM
 
12,705 posts, read 9,975,776 times
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Quote:
Originally Posted by Blondy View Post
Most people who are doing this are not doing it solely to get a tax break. They are investing the money they would have used to pay off the mortgage at a higher rate of return than what they are paying on the mortgage, thereby making money.

Anyone who is doing it solely for the tax break is probably misguided although there could be some cases where it changes your tax bracket I guess.
Doesn't matter. The tax rates are marginal, not total. You never save enough to pay your interest by taking the interest deduction - it is mathematically impossible.

On the other hand, the notion of investing and making a higher return than the mortgage does have some merit, though I'd think it's awfully aggressive for a retiree to have leveraged portfolios.
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Old 01-24-2015, 07:43 PM
 
6,452 posts, read 3,073,533 times
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Quote:
Originally Posted by ncole1 View Post
Doesn't matter. The tax rates are marginal, not total. You never save enough to pay your interest by taking the interest deduction - it is mathematically impossible.

On the other hand, the notion of investing and making a higher return than the mortgage does have some merit, though I'd think it's awfully aggressive for a retiree to have leveraged portfolios.
Depends on your pension and the size of your portfolio imo. If your pension is stable enough/large enough and your investments are basically gravy, its not that big of a risk if any.
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Old 01-24-2015, 09:12 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,592 posts, read 39,962,822 times
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Quote:
Originally Posted by biscuitmom View Post
A couple of years ago, we did exactly that (invested in a Vanguard donor advised fund) primarily for tax purposes. We had no idea how much enjoyment it would bring us,....
we did too, back at age 39 (Donor Advised Fund).

We use the fund to contribute at will and for perpetuity (with kids as successor donees)

The Donor Advised Fund makes it quite ez to sock away contributions for later during high tax years (like severance payouts). One more tool in the "Financial management kit" (which includes home and investment property mortgages on into retirement).

Mortgage deduction was never considered to be a 'benefit'... (Spend $10 to save $2 in TAXES) There are better ways to save $2 than to spend $10
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Old 01-24-2015, 10:24 PM
 
Location: Sacramento
13,784 posts, read 23,811,113 times
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Quote:
Originally Posted by MotleyCrew View Post
We decided to live in a more humble shack and just pay cash. sleep better at night.......
I can understand this, but we went the opposite route. Got a more extensive house in retirement with a mortgage in addition to the big down payment. While it has some obvious downsides, I have a hell of a retirement house.
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