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View Poll Results: Mortgage or Investments
No mortgage pay 350k for house 30 54.55%
Mortgage with money in investments 25 45.45%
Voters: 55. You may not vote on this poll

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Old 07-22-2019, 01:16 PM
 
Location: Idaho
4,650 posts, read 4,495,355 times
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Quote:
Originally Posted by TuborgP View Post
We bought a second home several years into retirement and easily
got a mortgage. They approved it prior to getting all of our investment income verification. They pretty much wanted pension, SS and source of down payment verification .
The issue for you may have been you were buying with your employers salary as part the approval process.
You are correct. At that time, starting SS was several years in the future and I had yet to purchase my SPIA. I had substantial savings, but no income, (after retirement). It's all working out, and I was seriously considering not having a mortgage anyway, for various reasons that we all know about.
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Old 07-22-2019, 01:17 PM
 
Location: NYC
2,930 posts, read 1,600,561 times
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If I'm around 70yo & have a decent amount of invested assets I'd just spend the 20% down payment - $70K - & keep the rest invested in a fairly conservative allocation, maybe 50-60% bonds. I'm not going to live 30 years past 70yo, probably not even 20 more years, why lock up $350K for the rest of my life?

I would even consider renting at that age if I found a suitable property & save that $70K down payment too.
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Old 07-22-2019, 01:53 PM
 
6,336 posts, read 4,771,440 times
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Quote:
Originally Posted by Hefe View Post
.....
I'm not going to live 30 years past 70yo, probably not even 20 more years, why lock up $350K for the rest of my life?
The money I did not spend on a house is not locked up. It has joined the rest of my retirement portfolio and is being spent down at the same rate as the rest of the portfolio, currently a bit over 4% and that increases each year.
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Old 07-22-2019, 03:45 PM
JRR
 
Location: Middle Tennessee
3,691 posts, read 2,237,563 times
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When we moved from Florida to Tennessee a couple of years ago, we went through the mortgage/no mortgage decision. My wife, who does not like debt, wanted to take our cash, along with some $ from our IRAs, and pay cash for our house. I, on the other hand, am a firm believer at using other people's money (at the right price) and wanted to put 20% down and get a 30 year mortgage. We compromised and put 50% down and got a 15 year mortgage for the balance.

No problem with getting a mortgage at a local bank. 90 minutes from the time we went in until we were done and on our way to lunch.
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Old 07-22-2019, 04:41 PM
 
Location: Mount Airy, Maryland
10,490 posts, read 5,957,375 times
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Quote:
Originally Posted by jrkliny View Post
This topic has come up numerous, numerous times.

It seems that some people just "feel" good without a mortgage, regardless of the rates. There also seems to be a very substantial percentage of retirees who cannot stand the idea of investing. They think the stock market is the equivalent to a trip to Vegas.

I am one of those who did take out a mortgage in retirement. Just before retiring I sold my house, then traveled and a few years later I bought a new house. The sale of the previous house would have more than covered the costs of the new house, but I took out a mortgage for about $350K instead. That was 6 years ago. Since then the return on my invested $350K has paid for the mortgage costs and returned an additional $100K. These are pretty average sorts of returns. I have a diversified portfolio of mutual funds and nothing that is high risk or speculative.
I'm in the first group but not the second. I have no problem with investing, I also understand the risk. My mortgage has been gone for years and I have no interest in taking on debt again. It's a peace of mind thing, I realize my investments will probably earn more than my mortgage rate but at advanced age a long bear could kill this plan and take years that many don't have to recover. Another factor is with the tax laws and with a reduced taxable income in retirement there is no tax benefit to the mortgage as there was in the past.
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Old 07-23-2019, 02:36 AM
 
Location: Silicon Valley
111 posts, read 45,088 times
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After paying off my first mortgage a couple of years ago, I don't think I ever want to have that hanging over my head again. Once I sell my current place, I don't think I even want to own again. Just think I'll invest the proceeds and rent. That way the landlord can have all the maintenance hassle.
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Old 07-23-2019, 02:43 AM
 
71,991 posts, read 72,020,102 times
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you keep seeing the "piece of mind " or feeling of comfort mentioned for paying off or not having a mortgage but the real comfort and piece of mind may be in having hundreds of thousands of dollars liquid and accessible if needed .

a house is a one way funnel with a check valve . once the money is in you can't get YOUR money out .. you can only use the house for collateral and take costly loans .

the problem is today the requirements for a heloc are the same as for a mortgage . you need the credit score , you need the income.

in 2008 people saw banks close helocs and stop loaning when they had no money to loan .

at least with hundreds of thousands in your own money you have a nice cushion and accessible money that may be able to pay off that mortgage usually at any time .


so there are situations both ways where it can be a case of the emperor's new clothes and the risks and comfort is a false sense of security
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Old 07-23-2019, 03:20 AM
 
Location: Mount Airy, Maryland
10,490 posts, read 5,957,375 times
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But those hundreds of thousands will be required to draw the earnings to pay the rent. So it's not just free money to use in emergencies or to spend if needed, for many of us it needs to be preserved and if it's spent down you may find yourself short on the earnings needed to cover the rent.

The peace of mind comes from not having a note due the first of ever month for the rest of your life and from not having to rely on market conditions to cover your debt.
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Old 07-23-2019, 03:35 AM
 
71,991 posts, read 72,020,102 times
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Quote:
Originally Posted by DaveinMtAiry View Post
But those hundreds of thousands will be required to draw the earnings to pay the rent. So it's not just free money to use in emergencies or to spend if needed, for many of us it needs to be preserved and if it's spent down you may find yourself short on the earnings needed to cover the rent.

The peace of mind comes from not having a note due the first of ever month for the rest of your life and from not having to rely on market conditions to cover your debt.
you can be way ahead though as long as the earning exceed what you pay in interest which at these interest rates is almost guaranteed over the longer term in a balanced portfolio.

it is like we earn not only enough to pay our rent in our case but almost all the other expenses we have being retired from those dollars .. as long as the long term average is ahead we are good to go ...in fact anything above a 2% real return supports paying all our expenses . it is a nice secure feeling to know we have enough liquidity to meet almost any obligation from emergency or unintended spending without loans .

it is way to easy for many to end up house rich and cash poor since housing tends to represent far to much of their worth ... that is not being safe and secure in reality even though they may not have a mortgage and think so . 25-50% of net worth is okay if it represents your home equity but most are way to high .

Last edited by mathjak107; 07-23-2019 at 03:46 AM..
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Old 07-23-2019, 03:49 AM
 
71,991 posts, read 72,020,102 times
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you can see here from the census data how house rich and cash poor most people are . surely a case of the emperors new clothes here when it comes to being "secure or peace of mind " because of a paid off home . because reverse mortgages are so costly and reverse compounding interest ain't your friend , in a pinch this equity will not generate what most people need over the longer term as expenses rise ...for the most part many who resort to reverse mortgage type loans only postpone the inevitable . that is they end up not being able to afford to keep the house going and provide their living expenses too .

so most would benefit from being less home equity heavy and have more available " growing " liquid assets in other areas , especially to try to improve the ratio between home equity and other assets ..


Last edited by mathjak107; 07-23-2019 at 04:31 AM..
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