Buying Retirement Home, Put More or Less Down? (move, state, years)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
We're in process of buying a retirement home. Just can't decide should we put more or less downpayment.
Normally the wisdom is to put as less as possible down. But in approaching retirement, we are very sensitive to investment risk, so it's sesnsible to put much down as possible. On the other hand, we are worrying about hyper inflation, so it's better to have something to hedge just in case.
I search this forum but can't find hint and hint link, please help, thank you.
Very difficult for any of us to rec'd, as none of us knows your financial situ.
Some people like/must do a mort, and some of us are mort free. Mostly about one's port, feeling on debt, ability to buy cash, housing circumstances, etc. ...
Haven't experienced any 'hyper inflation' since '79-'81. Yes there is creeping inflation, esp on many items in the basket most people 'buy', but if one is in there later years, why sweat what might happen in a unpredictable future decade or two?
House(s) is where one lives, and is part of a portfolio, though illiquid for the most part.
Personally, I would rec'd putting as much down as possible/comfortable and practical per your finances, unless a large monthly mort payment is to your liking. And keep in mind taxes, HOA fees, club fees, maintenance, things that go kaboom in the house, are all part of that monthly/annual nut, on top of the mortgage payment.
Little to write off against for many of us, thus a big mort is of small tax advantage, imo.
The Finance Mavens here will have more to offer, I am sure.
My 50Cts...
GL, mD
Recently my husband and I bought a second home in a location very near to my daughter, and much easier for our other kids to come to visit than our current location is. In a few months we will be making the move to live in the second home full-time, and then we will sell our current home (no mortgage on the current home).
We put down 25% on the new home. That just seemed to me a good compromise of all the factors. The as-yet-unanswered question is: will we pay off the mortgage on the new home when we sell the current home, or will we just add the proceeds from the sale to our savings? I think this question will be answered when we see what our financial picture looks like in the coming year. I may be looking to reduce our monthly expenses as much as possible, which would mean paying off the mortgage.
Thank for your thought. Just for info, we can even manage to cash it if we really have to.
Btw, luckily we only have taxes, maintenance, not HOA, club fee etc, even though the neighborhood is a nice one.
Quote:
Originally Posted by motordavid
Very difficult for any of us to rec'd, as none of us knows your financial situ.
Some people like/must do a mort, and some of us are mort free. Mostly about one's port, feeling on debt, ability to buy cash, housing circumstances, etc. ...
Haven't experienced any 'hyper inflation' since '79-'81. Yes there is creeping inflation, esp on many items in the basket most people 'buy', but if one is in there later years, why sweat what might happen in a unpredictable future decade or two?
House(s) is where one lives, and is part of a portfolio, though illiquid for the most part.
Personally, I would rec'd putting as much down as possible/comfortable and practical per your finances, unless a large monthly mort payment is to your liking. And keep in mind taxes, HOA fees, club fees, maintenance, things that go kaboom in the house, are all part of that monthly/annual nut, on top of the mortgage payment.
Little to write off against for many of us, thus a big mort is of small tax advantage, imo.
The Finance Mavens here will have more to offer, I am sure.
My 50Cts...
GL, mD
Location: Prescott Valley,az summer/east valley Az winter
2,061 posts, read 4,134,946 times
Reputation: 8190
While you decide how much to put into your house remember to keep some aside for an emergency fund and then think about where else you can get an income return of whatever you are paying as interest for your home. Not many places I can make the 4.87% that I am paying for my home loan, so we swung quite a bit toward paying off the loan. Total still owing on my house according to a statement I just got~ under $1000. Will be paid off before end of year.
We're in process of buying a retirement home.
Just can't decide should we put more or less downpayment.
I search this forum but can't find hint...
Hints:
The first assumption is that people approaching retirement should already own a home...
or if their locale/personal factors have mitigated against being homeowners for the prior 3-5 decades...
they will have set aside enough in their investments to afford to own one. The money is there.
The second assumption is that the own/mortgage question is far more about the price level.
If you can buy a suitable home for less than 25% of your net worth (less than 15% even better)...
then absolutely go ahead and have/keep that portion of your portfolio parked in a house. You'll be fine.
otoh, if your needs (locale, social, ego, etc) require a home that is more than 15-25% of your net worth
--and even if you have enough income to comfortably afford (2:1 vs the debt) to carry that mortgage going
into retirement-- you should probably tone down the wish list from the "want" back to the "need" level.
To hint 1, yes the money is there.
To hint 2, the home is about a half of net worth. But SS will come too. So what's your hint2?
Thanks.
Quote:
Originally Posted by MrRational
Hints:
The first assumption is that people approaching retirement should already own a home...
or if their locale/personal factors have mitigated against being homeowners for the prior 3-5 decades...
they will have set aside enough in their investments to afford to own one. The money is there.
The second assumption is that the own/mortgage question is far more about the price level.
If you can buy a suitable home for less than 25% of your net worth (less than 15% even better)...
then absolutely go ahead and have/keep that portion of your portfolio parked in a house. You'll be fine.
otoh, if your needs (locale, social, ego, etc) require a home that is more than 15-25% of your net worth
--and even if you have enough income to comfortably afford (2:1 vs the debt) to carry that mortgage going
into retirement-- you should probably tone down the wish list from the "want" back to the "need" level.
There is no advantage to financing a home, unless you wish to make it a speculative investment. The myth that you should borrow as much as you can because you get to write off the interest is bad advice. Net/net, you still pay more, after tax, with a mortgage than you do without one.
Inflation is very unlikely to rear its ugly head anytime in the near future, if for no other reason than it would benefit the US Government, who is in debt up to their ears, enormously. The Fed has done everything possible to create inflation, and even in Bernanke's words, we are in greater fear of deflation than we are of inflation.
On the issue of personal piece of mind, not having a mortgage while in retirement, and facing a very uncertain economic future, might be a very comfortable place to be.
Be conservative in your offered price, pay cash, and enjoy life.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
