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The goal should be zero debt when you retire. Cash should be used in maintenance of house,vehicles,etc.
be careful with general statements . the worst thing you can be is house rich and cash poor in retirement .
having that extra cash in an account and not tied up in the house inaccessible without incurring charges can be a far greater benefit at times. especially when the pay checks stop . when emergencies happen you can't sell the living room .
The goal should be zero debt when you retire. Cash should be used in maintenance of house,vehicles,etc.
Debt doesn't really bother us; if someone wants to loan us cheap money, why not take advantage of it? I'm happy with a 15 year mortgage at 3.25%, a 66 month auto loan at 1.9% and I just borrowed $15k for a year at a flat $99. Using borrowed $ has allowed me to just take spousal benefits and let my Social Security keep accumulating until I am 70.
But what is good for me may not be good for someones else's circumstances. Everyone has to work with what makes them comfortable.
Debt is a tool. Kind of silly not to use it when and where appropriate. Meanwhile, we've been retired for six years, and the 10-year draw period on our $200K home equity line expired two years ago. We simply applied for a replacement. No muss, no fuss, no bother. It did take take a good while to get to settlement, but that was due to the volume of such business they were doing.
an equity line of credit IS A LOAN . the same as any loan . you may have used the house as collateral but you still can't get the money out once it goes in . you must take a loan to get at that money . in fact if you can borrow against your looks or portfolio you can borrow the same money with no house .
that is the problem with equity once you have it tied up in a house . cash flow may end up being more important . 2008 saw equity lines of credit killed all over the place just as folks lost their jobs .
Our house has been paid-off for a couple years. It's a nice feeling. But I would not hesitate to take out a mortgage if we needed/wanted to move elsewhere. The caveat is that I would not hesitate to take out a reasonable mortgage, relative to our income. I see the size of some mortgage payments and I shudder.
Some of the most financially-comfortable people I've met are debt-free, more than those having big investment accounts. Of course, both are possible but there's a big segment of retired society that didn't grow up with investment accounts.
What I've noticed is that many who are invested in the market sure spend a lot of time following and worrying about their investments so their financial comfort comes at a price.
yep , getting mortgages can be a problem when you retire. especially if you delay taking ss .
most buyers of mortgages from the banks will not take asset based loans , only income based.
we would like to go the other way . we want a mortgage in retirement if we buy a co-op next year . if we pay cash , once that money goes in to equity buried in the house there is no way we can make use of it except by taking higher priced loans .
Math jack is so right about this. Since retiring, I have been refused mortgages for homes due to no income, even though I had liquid assets to pay for the homes many times over.
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