House financing question (pension, state, retired, years)

[Giesela]

I'm contemplating buying a house (not specific at this point) at a much higher price point than I was intially contemplating. I just can't get what I want unless I pay significantly more.
Just exploring financial theoreticals at this point, no need for sermons about choices

I've thought about taking money (lots more money) from my brokerage account to put as a down payment to keep the monthly payments down. I'm guess there will be a steep tax consequence?

I've thought about a regular downpayment amount, having a much higher monthly payment my pension won't cover and taking SS at 62 (which will be end of August) to make up the monthly payment (SS at 62 is 1760 vs 2477 at 66 4 months)

Regular downpayment, bigger monthly payments and take a distribution from my brokerage account

Thoughts?

[ansible90]

Money you take out of a traditional IRA, 401k, or 403b will be taxed as income (same as money you earn from a job).

Money you take from a Roth account is not taxed.

If the money is from a non-retirement account, you will pay capital gains tax if you sell for more than you paid. You should be able to see how much capital gains there will be if you look at your investment account statement.

[jrkliny]

Pulling money from investments to put into a house will tie up money you currently have access to. If you need money, getting it out of a house can be difficult. HELOCs are limited, usually have fairly high rates and are certainly not instant. Selling a house can take a lot longer and might not be feasible if you have any sudden needs.


Pulling money from investments, means your investments will have lower returns. My investments return more than the rate of my mortgage.


Then there is the tax issue.


Lose, lose, lose.

[MrRational]

Originally Posted by Giesela

I'm contemplating buying a house (not specific at this point)
at a much higher price point than I was intially contemplating.

Just exploring financial theoreticals at this point, no need for sermons about choices
Thoughts?

The theoretical is about the RATIO of our total NET WORTH that we can justify using for real estate.
(My number is pretty conservative and applies whether buying outright or with a mortgage.)

Do you know what YOUR ratio number is?

As to taking on a mortgage in retirement...
that really should only be done as a CHOICE such as for cash management reasons.

That we could pay all cash and be okay but choose to leverage the purchase instead...
because have other and better uses for the cash vs tying it up in property
and of course adequate income overall to afford the monthlies.
(My number is pretty conservative on this as well)

[Mary2014]

When I retired my budget for a new home was no more than my net proceeds from my already paid for home of 34 years.


My realtor suggested that if I wanted to look at higher priced homes I might want to consider doing a reverse mortgage. I had no interest in reverse mortgages- but, she mentioned it is a possibility if I did not want to touch my IRA for additional money.


I don't know how it would work - but, you might investigate it as an alternative.

[Mikala43]

Originally Posted by Giesela

I've thought about a regular downpayment amount, having a much higher monthly payment my pension won't cover and taking SS at 62 (which will be end of August) to make up the monthly payment (SS at 62 is 1760 vs 2477 at 66 4 months)

Regular downpayment, bigger monthly payments and take a distribution from my brokerage account

Thoughts?

Have you found a mortgage company that will qualify you based upon money in August?

[rjm1cc]

You need to show the lender that you can afford the home. Sounds like your pension and SS won't cover the mortgage, real estate taxes, utilities and maintenance.

[brava4]

Real Estate market has gone nuts and overpriced.. sure you want to do it now?

[Parnassia]

Originally Posted by rjm1cc

You need to show the lender that you can afford the home. Sounds like your pension and SS won't cover the mortgage, real estate taxes, utilities and maintenance.

In the end, this is the inconvenient bottom line. You'll either take a hit sooner or later if you go over, but the point is, you'll take it. And, have less time to recover from it. Better to adjust your wish list instead of your income OP. Or, wait and watch for a better option.

[fluffythewondercat]

Originally Posted by Giesela

I'm contemplating buying a house (not specific at this point) at a much higher price point than I was intially contemplating. I just can't get what I want unless I pay significantly more.
Just exploring financial theoreticals at this point, no need for sermons about choices

I've thought about taking money (lots more money) from my brokerage account to put as a down payment to keep the monthly payments down. I'm guess there will be a steep tax consequence?

I've thought about a regular downpayment amount, having a much higher monthly payment my pension won't cover and taking SS at 62 (which will be end of August) to make up the monthly payment (SS at 62 is 1760 vs 2477 at 66 4 months)

Regular downpayment, bigger monthly payments and take a distribution from my brokerage account

Thoughts?

You haven't said when you're actually going to retire.

Buying a house you don't much like because it makes some sort of sense can be just as big a disaster as the other route.

I don't deny myself anything, because there aren't that many things I want. If I found a house that was outside my initial budget and I loved it, I would find a way to make that happen.