When to buy and semi-retiring (loan, 401k, heloc, fees)

[marino760]

When I'm 62 I plan on semi retiring, buying a small inexpensive home half way across the country, selling my current home where I am and moving away, never looking back. I'm fortunate in that I can most likely transfer with the same company to where I want to move and go from working a full time job with them to just a part time job 10-20 hours a week but for a much less hourly pay. This and my SS will be my income at this time. My question is if I should buy my new home first with my current income and then semi retire and move. I currently have a mortgage but should have no problem qualifying for a much smaller mortgage of $200-$300 a month on top of my current one until my current home sells. I am concerned however that if I don't buy a new house before I semi retire, I won't qualify any longer for even a small mortgage with a 20 to 30 percent down.
Should I buy the new house with my current income and tell them it's a second home for the time being or an investment property or just semi retire first and hope getting a mortgage on a low income working part time and Social Security will still qualify me?
I'm trying to get my ducks in order but not sure what order they should be in.

[AZ Manager]

Do you have the equity in your current home to buy a new one with the help of a HELOC on the current home? Most HELOCs don't have fees or prepayment penalties so you would basically be paying cash for the new home but you need to have the equity to do it, they don't need to know what you plan on doing with the HELOC in most cases. Secondary/investment homes have higher rates and just don't make sense to get a loan that way if you can avoid it for what will be your primary home, to get a primary home most mortgages you will agree to occupying the home within 60 days.

If you have the equity you can buy the retirement home and work where you are now while your current home is listed so you can sell it slowly instead of taking a beating on just it because you are desperate to to get rid of it. Once it sells you give your notice with your employer and move not having to worry too much about it.

[marino760]

I hadn't thought about HELCO. I may have enough equity to do this at that time as home values are going up in this area about 7 percent or higher a year right now. I can also use a portion of my 401K combined with a HELCO to pay cash for another house depending on how much the new house will cost but there are several factors involved that I won't know about until that day comes. Of course, I would prefer not to use all the equity in my current house as I don't want to be in the negative when I go to sell it in case the home market takes a dump and it's value decreases like it did in the last recession.

[Jkgourmet]

Using a HELOC is a good idea. Using funds from your 401k is not. If you can't afford the rest of the house, take the mortgage (though it sounds like the mortgage will be small and, therefore, expensive.)

The alternative (and what I would do) is sell the current house, then buy the new one. If you can't qualify for the small mortgage on the new house, you really can't afford the house anyway.