Retirement: To mortgage or not to mortgage? That is the question. (pension, moving)
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No doubt this topic has been hashed and rehashed, but here goes -
Someone said "always use someone else's money".
My wife and I can't agree on this. As we consider a move after my retirement, she wants no mortgage debt...and while I agree in principle, I say some is acceptable. We will be in a position to do that, but it will mean tapping our cash reserves. We are fiscally responsible, and I am confident we could manage. I know there are variables unique to every situation, but I'm curious as to what you say.
If you are talking strictly dollars I think the mortgage will win due to inflation.
If you are talking about reducing your monthly money "problems" skip the mortgage.
You might be able to line up a no cost home equity line of credit to help with your cash reserves.
A mortgage could be hard to get once you stop working so line the mortgage up while you are stilled employed. I do not think it will matter that you are going to retire.
No doubt this topic has been hashed and rehashed, but here goes -
Someone said "always use someone else's money".
My wife and I can't agree on this. As we consider a move after my retirement, she wants no mortgage debt...and while I agree in principle, I say some is acceptable. We will be in a position to do that, but it will mean tapping our cash reserves. We are fiscally responsible, and I am confident we could manage. I know there are variables unique to every situation, but I'm curious as to what you say.
Depends on what you mean by tap, how much and for how long. What will be the percentage rate of out flows from your reserves. Will you have SS kicking in later or will your retirement income at the start be it.
How are your cash reserves invested?
Are u considering a retirement community by chance
If you are talking strictly dollars I think the mortgage will win due to inflation.
If you are talking about reducing your monthly money "problems" skip the mortgage.
You might be able to line up a no cost home equity line of credit to help with your cash reserves.
A mortgage could be hard to get once you stop working so line the mortgage up while you are stilled employed. I do not think it will matter that you are going to retire.
I prefer mortgage free living, however the low interest rates make a mortgage or at least a HELOC attractive.
Therefore, about a year ago, I decided a HELOC might come in handy to help fund some assistance for the 'kids,' rather than taking money out of deferred tax accounts.
Several years ago, I had some HELOC's that I got on practically a signature loan. So, I didn't expect much difference now, particularly since we are retired, have no debt or mortgages, have always had 800+ credit ratings, actually have the money in other accounts -- and only wanted a 20-25-percent HELOC.
Boy, was I surprised! First, it's difficult to even find banks willing to deal in HELOC's (versus second or even third mortgages). Secondly, the HELOC process is now as difficult and onerous as I previously remember a full-up mortgage process being. Third, the qualification process has gotten quite rigid -- and I'm not sure many retirees could even qualify.
Monthly income and expenses. If that concept is important then you won’t want a mortgage payment given the choice. As far as taxes go, bear in mind paying a $1000 to save $350 makes little sense.
Both...buy the house using a reverse mortgage. We bought our house 8 years ago using a reverse mortgage and have no house payment ever. We have to pay taxes and insurance, of course, but you'd do that anyway. We put down 45% and live in a lot nicer home than we could have by paying cash for a smaller home in a not-so-nice neighborhood. Good thing is the home has appreciated in value and if we sold it tomorrow, we'd get back more than we initially put down after paying off the reverse mortgage.
I would have had a mortgage for life whether I stayed in my current house or moved to my new house in Colorado. My pension and Soc. Sec. would be sufficient for expenses.
However, I am between things right now. I have a construction loan on Colorado that the bank will not convert to a regular mortgage until I sell the house I'm currently in. I can afford both but it doesn't work out on the bank's numbers, so I will be paying only interest on the construction loan until there's a contract on my Mass. house.
My eventual mortgage and taxes will be substantially less in Colorado, although that is not why I'm moving there or building such a small house- it's just the way I want it. I paid cash for the lot and, being in town, was a lot more than if I bought out of town, but again, that's what I wanted.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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Note of Importance for obtaining Mortgage in retirement
Buying a house in retirement can be a challenge.
Conforming loans (Fannie & ilk) want to see Income from wages.
You can use Asset loans but they too want to see 2 years of Income from IRA, annuities, other payments. How much you have in convertible or equivalent assets is immaterial to the loan.
Just having the ability to buy in cash does not guarantee a Conforming loan at attractive rates.
We had to jump thru a lot of hurdles in purchasing 3 rentals, one of which will be our retirement home. Seattle area pricing.
The 1st rental we just gave up on the process in getting prequalified and bought in cash when we saw an opportunity. Rentals #2 and #3 we placed +50% down payments and getting the loans were a hassle. Rental #2 we paid 4.75% (30 yr, 0 points) last October 2017 when rates were close to 4%.
#3 we paid 4.25% (30yr, 0 points) locked, Jan 25 2018, Closed on March 1. This was a close call for us because the seller/builder was inept in recording property delaying the loan approval and closing.
We will extinguish all or most of the loan on the #2 rental when we sell current home.
most likely I will have a mortgage as I want to be a snowbird and get a condo somewhere either florida or Georgia.
I don't have an issue with having a mortgage when I retire. for me it's more of how to make the best of my money.
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Note of Importance for obtaining Mortgage in retirement
