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Old 03-11-2015, 02:43 AM
 
71,873 posts, read 71,942,576 times
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unless the kids want to live there it can be a pain to get rid of a house as well as expensive.

many states require homes to go through probate if not in a trust and that can take months of taxes and expenses . not all states use quick claim deeds , ours does not .

my son is buying an inherited house from someone now now in westchester ny and it is going into the 4th month waiting for it to clear probate so they can close.

in the mean time the kids who inherited the house he is buying have been shelling out big bucks each month that goes by. between 18k a year in taxes and heat and insurance as well as broker fees and local transfer fees it all can be killer.

nothing beats inheriting cash if it is something you don't want to keep.

inherited homes can also be a minefield when it comes to selling them . the wording of a will can kill a closing if the title company isn't happy with it.

we had inherited a house and the title company stopped the closing.

they asked to read the will and it read to my child xxx i leave my house and possesions . they said the word "only " as in only child was missing .

they were afraid others would lay claim so they stopped the closing and we had to get affadavitts from relatives she was an only child.

boy , did that cost us, as all the attorneys and title company had to get paid for the day and we had to reschedule.

Last edited by mathjak107; 03-11-2015 at 02:53 AM..
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Old 03-11-2015, 03:00 PM
 
527 posts, read 1,093,124 times
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At any age, if you have the cash and are trying to decide on a 30 year mortgage or pay cash
Why not the mortgage?

If you have the money, put it away in a bank acct.
Pay the mortgage from that bank acct.
You are getting it at 4%, also interest is tax deductable

Plus you have cash available if an emergency happens

Why be house rich and cash poor?

Anyway, with Fannie and freddie mac going bankrupt, it is not inconceivable that they will be terminated by Congress.
No bank today will write a 30 year mortgage and commit to loaning for 30 years at 3-4%
so it is very possible that the 30 year mortgage will become extinct
If that happens, the only mortgage you will get is a 20 year (or less ) or adjustable

Now if you do not have the cash, different story
Then the question is can you take on debt at 70 or later.
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Old 03-11-2015, 04:57 PM
 
Location: Near a river
16,042 posts, read 19,004,474 times
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Quote:
Originally Posted by mathjak107 View Post
many seniors are taking advantage of reverse mortgages to purchase. these are different from reverse mortgages you take on hmes you already own.

they require a large down payment of 1/3 to 1/2 but you never make another payment again. you do pay taxes and expenses but no mortgage payment.

the house is sold by the bank when you are no longer in it and anything left after payments of what is owed is given to heirs.


it can be the best of both worlds . getting a more expensive house in a better area and keeping cash.

i am toying with the idea myself since i would love to live in a building near our rental that is out of budget under conventional methods of purchasing an apartment and would take to much cash flow but the numbers will work if we do the above..

there are min ages for this.
Does this reverse mortgage for purchasing a house mean that the $ amount that the lender provides is considered a LOAN with interest due over the many years the senior lives there, and that the final loan repayment (when youngest owner dies) could have accrued so much as to leave little or no equity in the home at repayment time?
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Old 03-11-2015, 05:31 PM
 
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Yep that can happen. But by the same token that money one would not be spending paying that mortgage can be invested at higher returns for heirs.
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Old 03-12-2015, 07:55 AM
 
Location: Jamestown, NY
7,841 posts, read 7,344,278 times
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Quote:
Originally Posted by kinkytoes View Post
This is so weird. Why is it OK to give a 70 year old a 30 year mortgage? Sorry this is insensitive...but what are the chances they are going to pay it off? What if you are 80? Can you take out a 30 year mortgage? What about 90?

Look OP if the banks will lend it and you may not live to pay it back, then go for it. You can enjoy your money during your life to do whatever you want...and still live in a nice house.


The downside is that if you have a problem, the bank can foreclose on you, and you could forefit all the money you put into the house. If you have automatic payments then even if you forget, it should not be a problem. But why risk it?
Why would a bank NOT give a 30 year mortgage to a 70 or 80 year old? My guess is that most mortgages are not held for the full 30 years anyways. Banks get most of their interest at the front end of any loan be it a car loan or a mortgage. They make a lot more money on 30 year mortgages that are only held 10 years and then paid off from a sale than they do by having their money tied up in one home for 30 years because they get most of the principal back to loan out again rather than waiting 20 more years to get all of it back.

If the OP can afford the mortgage/taxes/insurance, why should he/she tie up $100,000 in a house? It's the classic "house poor" scenario. People who depend on SS/pensions have far more stable incomes than people who depend upon jobs, and if inflation starts eating into income or investment income shrinks, then put the house up for sale.

Problems only arise from retirees who buy a house that they can not really afford, such as a fixer-upper that's a money pit or one that costs way too much to heat/cool/maintain.
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Old 03-12-2015, 12:24 PM
 
Location: SoCal desert
8,093 posts, read 13,249,708 times
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Quote:
Originally Posted by Escort Rider
Where do you live that there are homes selling for $70,000? That is just mind-blowing.
My nephew and his wife (in their 50's) recently bought a 2 bedroom 1 bath in Loyalton California for $50K. They did renovations for another $10K.

They're 45 miles from Reno Nevada.
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Old 03-18-2015, 07:25 AM
 
1,027 posts, read 2,175,487 times
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Quote:
Originally Posted by nicet4 View Post
John (68) and his wife Ellen (67) are thinking about selling their mortgage free home for $140,000 and buying a smaller single floor plan home for $120,000.

Of course they could pay cash and pocket $20,000 but would there be an advantage of put 20% down payment taking a $96,000 30 year mortgage at 4% and keeping the $116,000 cash for "in case of" then paying $482/month to live in a house that will likely never be paid off?

To be clear the $482 represents about 10% of their retirement income stream and the $116,000 would only be used in an emergency.

I think they should mortgage. At their age, a nest egg is important. Secondly, having the mortgage means a tax write off. Additionally, 10% of their income towards a mortgage is a great position to be in. The best thing for them to do is to free up that cash for that nest egg or another condo somewhere else for snow birding. Let their children deal with selling off the condo once they're gone. I don't believe in older parents sitting on paid mortgages and being house poor. They deserve to travel and enjoy each other!
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Old 03-18-2015, 08:02 AM
 
Location: Somewhere in USA
586 posts, read 498,655 times
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A mortgage HAS interest rate of certain point...this day in age is minimum 4% and having to make a payment monthly is rather a little stressful even if they can automate the payment process and has all the cash set aside just for that. It's basically adding something to their monthly routine to making sure that the mortgage payment went through. Given their ages, shouldn't they be worry-free of a lot of things? I am looking after my folks every day and as they are reaching their 70s, they forget things left and right.

I don't understand the logics behind getting a mortgage at retirement ages. Most people, myself included would want to have NO payment monthly whether I have the cash for them set aside or not. Granted you can save money with interests write off by year end, but really is it worth it?

Peace of mind and worry-free is a decision that must be made by themselves here...I would not offer any opinions to them.
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Old 03-18-2015, 11:10 AM
 
530 posts, read 539,573 times
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Quote:
Originally Posted by iluvmycuties View Post
I think they should mortgage. At their age, a nest egg is important. Secondly, having the mortgage means a tax write off. Additionally, 10% of their income towards a mortgage is a great position to be in. The best thing for them to do is to free up that cash for that nest egg or another condo somewhere else for snow birding. Let their children deal with selling off the condo once they're gone. I don't believe in older parents sitting on paid mortgages and being house poor. They deserve to travel and enjoy each other!
^^^ THIS! ^^^

We're (fast-) approaching that magical "70" milestone, working & living in Northern California (SF Bay Area), and plan to relocate when we (finally!) retire.
One of the things we both agree on is that we will have a mortgage of some size - preferably small - just so we can keep a better portion of our equity ... "just-in-case" ...

My best friends retired a couple of years ago, sold their home, and purchased another for cash. While they (indeed) do not have a mortgage, they have had medical expenses for which they had to prematurely 'tap' their remaining savings - which has been a hardship for them.
Their strong recommendation to me was to not purchase another home outright (for cash), but to get a mortgage for that next residence, and maybe put a large chunk of cash as a down payment, leaving a small-ish mortgage to be paid-off. That is our current plan. The next 2-3 years will tell us how we will actually act upon this decision.

So ... Even though our parents operated according to "Old-School-Rules", we will most likely be a lot more mobile, relocating at-least once, planning to carry a mortgage, to have enough of a nest egg to be able to cover those unexpected co-pay expenses, and to live a semi-comfortable life, in retirement.

As with everything these days - YMMV - And, I wish you well with your decisions! ... TC
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Old 03-18-2015, 11:26 AM
 
Location: Los Angeles area
14,018 posts, read 17,765,919 times
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Default Further discussion about reserves and emergency funds

Quote:
Originally Posted by tomchard View Post

My best friends retired a couple of years ago, sold their home, and purchased another for cash. While they (indeed) do not have a mortgage, they have had medical expenses for which they had to prematurely 'tap' their remaining savings - which has been a hardship for them.
Their strong recommendation to me was to not purchase another home outright (for cash), but to get a mortgage for that next residence, and maybe put a large chunk of cash as a down payment, leaving a small-ish mortgage to be paid-off. That is our current plan. The next 2-3 years will tell us how we will actually act upon this decision. .................
Your point is a good one, but I still tend to come down on the other side of the fence. Let's take the example of your friends who had to "prematurely tap their remaining savings". In their case, since they don't have a mortgage, the additional cash flow means that they can rather quickly rebuild their remaining savings by directing the amount they would otherwise pay on their mortgage back into savings every single month.

My own example: I buy cars new then drive them forever. Back in 2007 I bought a new car for a bit less than $27,000 and paid cash for it. Within about a year I had replenished that entire amount just from extra cash flow each month.

As someone else said, a lot depends on our own comfort level with doing things a particular way.
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