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We got the same thing done yesterday! In preparation for selling the house, we contacted a septic service company. The initial estimate of $195 to pump out the tank ballooned to $3950 for a replacement. Now we have a brand new concrete tank which will last for decades for the new owner(s). We also have a completely ruined front lawn (the work was done right after 3 days of heavy rain!). The service company did repack the dirt and sprinkle some grass seeds. We hope that the lawn will look decent enough when we are ready to sell the house.
The next big expenses to get the house ready for sale is a new roof, repaving the driveway, ripping up the worn out up stair carpets and restoring the original hardwood floor, ripping up the cracked bad linoleum basement floor for a polished cement one.
If the housing market is hot in our area, we are likely to sell the house quickly without even having to do any work (except the septic tank which seems to be a must - septic tank inspection was not required and we did not even know or think about it when we bought the house 23 years ago!). Housing market has never rebounded in our area, and if one of the big employers here pulls out in the next few years, it will be even harder! So we are doing everything that we can to get the house to sell in a short time.
We have always owned a home but now I am not sure whether it is a good idea. We barely broke even with the first house (after it sat empty for over 2 years while we were back in school). We lost $7K in the second home (had to relocate after I graduated and moved from MA to NY). After adding all the past expenses ($2K for the aluminum eaves, $4K for replacing the underground oil tank with above ground) and the current & expected expenses to fix the house up for sale, we will be lucky if we break even.
It's hard for me to imagine how you could just break even after 23 years. Housing prices in 1992 were very low compared to now. Of course, my wife and I could have done worse by buying worse, but we house hunted every weekend for three months to find the place we live in now. It had a lot of deferred maintenance, which we took care of ourselves. It was semi-distressed property, since the old couple who owned it had health problems and didn't have enough money to do repairs. We'll probably cash out with a nice chunk of change when we sell, but for the next 10 or 15 years it's a free place to live, which leaves enough money for maintenance.
You should have ended up with half of his pension and half of the retirement savings. If you kept the house and gave him everything else, you were really stupid. You should have sold the house and split the proceeds or been mutually responsible for being upside down on the loan. It's too late now. You're finding out that a mortgage in retirement is a choke chain around your neck.
My comment was not about my property settlement agreement with my ex-husband. Rather, it was an observation that whether or not a mortgage is cumbersome in retirement depends entirely upon one's circumstances.
Or maybe you were a late-in-life buyer? Not one size profile fits all. And, a lot of retirees fairly well-off CHOOSE to carry a mortgage and invest elsewhere.
Perhaps not mentioned here is that it may not be a mortgage that throws retirees overboard, but the associated costs of home-owning which in and of themselves can equal or exceed the cost of a rental. Even those with paid-off mortgages lose their homes due to these associated costs they cannot meet. Namely property tax, which in many states is growing out of sight, and house insurance, which depending on where you live can be expensive. These wild cards may find many more retiree homeowners in straits in coming years, and in many if not most cases they cannot be blamed (though there are those who will want to...blame).
If one cannot afford the cost of a home, it is too much home. That statement is not limited to mortgage costs. It means, all costs.
What places are there where monthly taxes are say $1,000 (Long Island, New Jersey, etc) and rentals are less than that? The owners of a rental unit have to pay those same crazy high taxes and that's going to be reflected in the rent. Plus taxes don't go up overnight - a retiree living in that area is paying about the same amount before retirement and should know what their retirement income will be and whether or not it will cover that amount. I have family members in both of those very high tax areas, and when they retired, they sold their homes and moved to a lower cost area so they didn't have to keep paying those taxes. So while I understand it may not be ideal, if you know your monthly income isn't going to meet your monthly obligations, you need to do something about it.
Many if not most retirees are in denial about how the future may evolve in their cherished old hood. I see this left and right in the high cost Bay Area. Yeah, you paid off your mortgage 20 years ago, but even with Prop 13, property taxes go nowhere but up, and the cost of labor is horrendous (a new roof is several times as expensive as it was 20 years ago). Etc. Unless someone is at least a 5%er, one needs to face the music when the time of limited income is approaching.
NEgirl. You're exactly right on. It used to be that people thought that once you paid off the house, you were set for life for a place to live. But the cost of keeping the lights on etc. has gone through the roof over the years. Our house is paid for, but it still costs us with internet, phone, elec. nat. gas, sewer, garbage, wastewater, taxes, cable and insurance about $10,000 a year. We looked at that for our retirement years and decided we had to cut that down a ton. And that doesn't include any money for repairs and upkeep. We've figured out a way to do, and live the way we want, but subdivision, suburban living is no longer in the plans. Too expensive for folks on a fixed income in retirement.
Many if not most retirees are in denial about how the future may evolve in their cherished old hood. I see this left and right in the high cost Bay Area. Yeah, you paid off your mortgage 20 years ago, but even with Prop 13, property taxes go nowhere but up, and the cost of labor is horrendous (a new roof is several times as expensive as it was 20 years ago). Etc. Unless someone is at least a 5%er, one needs to face the music when the time of limited income is approaching.
Amen to that. My brother lives on LI with high taxes. He plans to move to another state when he retires because of the expenses. My sister in law also lives in LI. She says she can never give up the house and will cut back on other expenses so she can stay there. All her kids are gone and they have empty bedrooms gathering dust. In her case emotions are winning over logic and reality.
In many places property tax is rising much more than the expected and reasonable yearly hike. All it takes is a town like mine where the high-haves decide to build a 15-mil-dollar library instead of adding on to the existing one or joining forces with the adjacent town, build a multi-mil middle school instead of same, maintain town amenities that are annually losing money, and you can get a real surprise in the mail from one quarter to the next.
Not only that, but parts of the state where I live received a 29% increase (you read that right( in their electric bill, yes, suddenly. The outcry was significant enough for a moderation, but just like car gas that dips for short periods, it continues to rise overnight. Homeowner insurance costs too. Anyone trying to live by the COL rate hike of 3% or so is living in a former world.
Blue states / counties with lots of 1%ers living in them are prone to the things you mentioned here. All part of the calculus that goes into deciding what to do and where to go before getting too old.
Blue states / counties with lots of 1%ers living in them are prone to the things you mentioned here. All part of the calculus that goes into deciding what to do and where to go before getting too old.
Folks need to look at the rate of price hikes on prop taxes and insurance, etc. If it's say 10% more per year, project into the future that compounded 10% and see what you're paying in 10 or 15 years. Many may be able to handle the costs now with reasonable hikes, but at high annual % rates of increase, maybe not. I was rather shocked to do that projection.
I sort of get it, because those of us in our mid sixties were living by a certain set of rules that got changed mid stream.
My husband and I are both in our 60s and we always tried to do things right, according to the way things were at the time.
We bought a little more house than we could afford, because everyone knew that wages always went up, and so did property values.
We sold the $34000. new, 4 bedroom house, for $139,000. to trade up to the house we really wanted, only to take a bath on it in 2010. The husband's business was forced to close for lack of business, and so, here we are at retirement age just treading water. We were always diligent about saving and being debt free, yet we are still struggling because the rules changed mid stream. We, along with many others, were caught with our pants down.
We have a very small mortgage now, because we thankfully were able to downsize, but still, if we had a crystal ball we could have done better.
It's hard for me to imagine how you could just break even after 23 years. Housing prices in 1992 were very low compared to now. Of course, my wife and I could have done worse by buying worse, but we house hunted every weekend for three months to find the place we live in now. It had a lot of deferred maintenance, which we took care of ourselves. It was semi-distressed property, since the old couple who owned it had health problems and didn't have enough money to do repairs. We'll probably cash out with a nice chunk of change when we sell, but for the next 10 or 15 years it's a free place to live, which leaves enough money for maintenance.
Perhaps this is just a quibble, since I understand what you are explaining about your home and your situation, but there is really no such thing as "a free place to live" unless someone else (rich uncle?) is paying for it. Your own conclusion to the final sentence acknowledges as much ("which leaves enough money for maintenance").
However much it makes sense to have a paid-off mortgage (mine is), it costs money to provide a home for oneself:
1. Property taxes
2. Maintenance costs (somewhat unpredictable depending on age of the property, but can be huge)
3. Insurance
4. Foregone investment returns on the amount of equity in the house
Again, I am not arguing against having a mortgage-free home in retirement (it is my own choice for myself), but no one should delude himself about having a free place to live!
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There is no "free place to live".
