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I have been retired for several years. In my search for the perfect place I have bought and sold several homes. I now rent. Like most people I have met I thought I had picked that great place to live many times but once I moved in and got settled I began to see issues I did not notice before. My point is that many people who move after retiring to a new location end up moving back within six months to a year. My suggestion to anyone considering packing up, selling, and moving to a new location is to try it first before buying. Try to get a rental with a short term lease. This way you will have time to see if you really like the new area. Secondly that gives you time to learn a new area and shop for a new house with recommendation from locals and your observations.
(There is no once-size-fits-all answer to the question. Having a mortgage in retirement is perfectly fine for people who are emotional prepared to do so and who are financially astute enough to invest their capital in more productive areas than burying it in the backyard in order to save three and a fraction percent in interest charges.)
This was the first point seasallyttle missed.
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Originally Posted by seasallyttle
If that works for you, do that. I was speaking for myself - my opinion. If you can earn a few percentage points in the real estate market and the stock market and it is worth it to you to take on debt to do that, be my guest. But some people just want peace of mind. And a paid for place to live is peace of mind. My dad retired with millions of dollars and was extremely financially savvy. But some unexpected health issues came on, the market dipped in 2008, and then his wife had unexpected health issues that made her handicapped. Life happens. And it can get expensive and distract you from wanting to just gain a few percentage points in the market- and one may become not even healthy enough to bother. And it was a stress to them as they wanted out of their house but could not sell it for near what they paid for it due to timing. If I was retiring with a pension and $500k, I would want my house paid for. To me, that is not enough to play with or take risks with when your earning power is on the downswing for the rest of your life - which hopefully would be 25+ years. But that is just me.
MMoB might have been a bit on the harsh side but you did say you and not me. That was the point.
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Originally Posted by newenglandgirl
This holds true for a lot of retirees. Not all, of course. There's a lot to be said for owning a house when it comes time for a buy-in to assisted living. Instead of cashing out other lucrative assets, cash out the house for this. Different approaches work for different people.
As is the case we all are products of our environment and we have many different ideas and beliefs. I agree you are right most people would be better off if they owned out right the house they live in.
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Originally Posted by Umbria
I absolutely agree with this. I paid off my house last year and I still pinch myself when I think "This is all mine!!!!"
Congrats and that is fantastic.
One point that has been made here and I am not sure if people truly understand is that paying off the house might be a great goal but some might not have that option. Here is a bad thing to do when it comes to an existing mortgage. DO NOT I repeat DO NOT take money from your IRA/401k/403b in a large chunk to pay off your mortgage unless two things are happening. First you have an emergency issue that dictates you to do so. I am thinking medical here or some other catastrophe. Second you have an abundance of money in those accounts and enough to continue an income stream you need to have and more. The reason is pretty simple. Your mortgage interest will be less then your average mutual fund investment is paying. Mortgage interest rates below 5% are a better investment then to take the tax hit for a large withdrawal from a tax deferred account. If you are taking it from after tax sources or money market funds then by all means that is a completely different set of circumstances.
As people have said there is no one size fit options. There are however some practical do's and don'ts.
We intend to buy down (from currently owned home) in our next move, paying cash with the proceeds and using the margin of profit for cushion. Just our particular strategy that makes sense for us in particular.
Makes no sense to me at all unless you have millions upon million sitting around so it would be the equivalent of buying a lawn mower. Why tie up all that money at low interest rates with the possibility of using the other money for something else...even just investing it?
What kind of peace of mind did it give the folks above?
We intend to buy down (from currently owned home) in our next move, paying cash with the proceeds and using the margin of profit for cushion. Just our particular strategy that makes sense for us in particular.
I already did that with this home and plan to do the same with the next home.
We intend to buy down (from currently owned home) in our next move, paying cash with the proceeds and using the margin of profit for cushion. Just our particular strategy that makes sense for us in particular.
We paid off the mortgage on the house in NY over 20 years ago. We have a 3.6 % mortgage on the one in FL and when we sell in NY, we'll have to run the numbers on what is best to do at that time. I lean more towards having no mortgage, but if investing yields a higher return, I can go that way too. We're five years away from DH retiring, so we'll see how much mortgage is left by then.
We paid off the mortgage on the house in NY over 20 years ago. We have a 3.6 % mortgage on the one in FL and when we sell in NY, we'll have to run the numbers on what is best to do at that time. I lean more towards having no mortgage, but if investing yields a higher return, I can go that way too. We're five years away from DH retiring, so we'll see how much mortgage is left by then.
That last point is going to make the difference. If you sell the house in NY I am betting you will have more then enough to pay off and still invest. It could be your run around money to travel to far away lands
(There is no once-size-fits-all answer to the question. Having a mortgage in retirement is perfectly fine for people who are emotional prepared to do so and who are financially astute enough to invest their capital in more productive areas than burying it in the backyard in order to save three and a fraction percent in interest charges.)
I couldn't rep you again, but thanks for saying what I was thinking!
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