Getting a mortgage in retirement (payment, dates, raising, best)
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I easily got a mortgage after being retired 12 years. I downsized and had a huge downpayment from the sale of my previous home. My income was more than sufficient for the approval of the remaining mortgage amount. I pay less than rent for a two bedroom apartment. I could pay it all off tomorrow if I wanted but I like having investments and a nice cushion for things I want to do. If push comes to shove, I have equity in the house for major repairs if needed. There is a little mortgage tax advantage but not much. Everybody has their own comfort level equation.
^^^^^ This ... I hope! ^^^^^
Some of my dearest friends, who retired about 6 years ago, purchased their retirement home outright, to be debt-free. What they did not do was to keep a "cushion" (as SunGrins has) for those unexpected expenses; in their case, both husband and wife needed surgeries less than two years later.
Their strong recommendation to me was that DW & I should make every effort to get enough saved, pre-retirement, to allow for some sort of "cushion", once we fully retire. We too are looking at a possible large downpayment for a retirement place when we sell-out, here in Cali. But, we both want to be able to afford a mortgage, so that we can keep some of our savings / investments continuing to work for us.
Thanks (Everyone!) for the good information coming-across in this thread ... We 'ppreciate it!
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No shortage of opinions around here, so here's mine:
Before you retire (Are ya listenin', Youngsters?) get your home paid for. You only have to do that once, for the most part, because you will use the equity in that paid-for mansion to buy another and another and another if you like.
If you never get that home paid for you will have the same questions our OP has.
Some of us have lived long enough to know thatwhen you retire has a huge bearing on your future. If you retired in 2000, for example, then you had to go through the crash of 2000 - 2003 and then the crash of 2007 - 2009. You would finally come out of it in 2013, but in the meantime the S&P spent 13 years underwater.
Some of us have lived long enough to know thatwhen you retire has a huge bearing on your future. If you retired in 2000, for example, then you had to go through the crash of 2000 - 2003 and then the crash of 2007 - 2009. You would finally come out of it in 2013, but in the meantime the S&P spent 13 years underwater.
in which between 2000-2013 a $10k investment grew to $28,553, and is worth $34,046 today. During the worst of 07-09, VWINX fell about 18% and recovered in under nineteen months.
in which between 2000-2013 a $10k investment grew to $28,553, and is worth $34,046 today. During the worst of 07-09, VWINX fell about 18% and recovered in under nineteen months.
The bond component of any balanced fund is going to take a hit if interest rates rise. Your statistics are taken entirely from a period of falling rates (2000-2013).
The bond component of any balanced fund is going to take a hit if interest rates rise. Your statistics are taken entirely from a period of falling rates (2000-2013).
When do you think rates are going to rise? People have been talking about that for 5 years. The Fed is not exactly moving rapidly in that direction. The one rate increase and the next proposed one are all but meaningless....more symbolic than effective.
Many bond funds are mostly intermediate/short duration bonds as a further hedge. There is another even bigger factor. The value of bond funds and to some extent individual bonds are worth what people are willing to pay, rather than just theory.
Agree! Of course retirees are better risks. Very few want to be losing their home in retirement. These lenders should take another look at the PEOPLE they are lending to - not just a generic formula.
Better risk of dying before full repayment and leaving the lender stuck in an estate settlement that could drag on for years, months in the best case. Yep, I'd want a piece of that business.
When do you think rates are going to rise? People have been talking about that for 5 years. The Fed is not exactly moving rapidly in that direction. The one rate increase and the next proposed one are all but meaningless....more symbolic than effective.
5 years? Very short in comparison to how long rates have been under central bank control. Over the last 60 years, how many have had rates at currently low levels?
Why do I think rates will rise? History. You shouldn't cherry pick the last 5 years and ignore the other years, far more numerous.
Quote:
Originally Posted by jrkliny
Many bond funds are mostly intermediate/short duration bonds as a further hedge.
Ok, but one must pay attention to this when choosing the fund.
Quote:
Originally Posted by jrkliny
There is another even bigger factor. The value of bond funds and to some extent individual bonds are worth what people are willing to pay, rather than just theory.
We know that the fed funds rate is related to other rates and to bond YTM's, but of course the correlation is not 100%.
We don't have any inflation - i.e., too much money chasing too few goods and services. Further, wages are lower for far too many. Fed would love to see a 2% inflation rate - but we just can't get there. Deflation is a bigger fear. We're not looking at a significant rise in rates, anytime soon, imho. Globalization has a lot do with this - keeps wages (and inflation) low.
in which between 2000-2013 a $10k investment grew to $28,553, and is worth $34,046 today. During the worst of 07-09, VWINX fell about 18% and recovered in under nineteen months.
I am a fan of Wellesley and it is my go to investment fund in many ways today. However I think the real message you are promoting is not as much Wellesley but the importance of asset allocation. Wellesley is a heavy bond fund while the S@P is a equity index. As we approach our decade before retirement many need to reconsider their allocation others may not if they have pensions etc. Knowledge of your own situation and how to apply it to investing is critical to retirement financial investing. Even if you don't become a Boglehead any and all investors would be well advised to read the Jack Bogle's Common Sense of Investing.
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