Which way to go...wwyd???

empofuniv · #1 11/30/10, 11:38 AM

If you were shopping for a retirement home and had a fairly decent amt of $$$'s saved up what would you do? Put down enough of a down payment to have small monthly payments, or buy a place total cash although it would take most of the savings acct?

If every thing stays on track I will retire with 23yrs Federal service in Jan of 2012. DH retired after 32 yrs federal service about 7 yrs ago and is waiting for me to retire. He will be 65 next year and I will be 63.

We will both have our federal pensions and SocSec for income. Except for a small balance left on his truck we are debt free and will be debt free when I retire if nothing catastrophic happens in the next year.

In our 40+ yrs of marriage we have never owned a conventional home, have lived in this wreck of a mobile home since the mid 80's. No equity in this place.

We need to move out of San Diego and are thinking AZ around the Florence area. I've started home shopping on the internet and we could afford a place there from what I've seen so far.

I'm leaning towards large down payment and small mortgage payment, but am open to the lessons those with more experience have learned.

What would you do?

Pam

Kmac15 · #2 11/30/10, 11:42 AM

I would never tell someone to sink all their money into anything. You should have a nest egg for emergencies.
When we financed our place we were able to get a 10 year loan for the balance.

Good luck on your adventure

Yvonne's hubby · #3 11/30/10, 11:43 AM

I would shop around and find a place that I could buy outright. In todays market the are lots of places available cheap.

Sonshine · #4 11/30/10, 12:06 PM

I think I would try to buy a place outright because of the way the economy is going there's no telling what's going to happen tomorrow. At least you'll have a bit more security than someone who is trying to make monthly payments. What happens if something happens to your retirement funds? The Federal pensions and SSI may not be around much longer the way our government is going. At least if you owned the place you could raise some food and not have to worry about where you'll get the money to make payments if you lose your monthly checks.

willow_girl · #5 11/30/10, 12:27 PM

The real estate market isn't stable enough right now to justify a big investment. Five years ago, I sold a house to a lovely young couple for $107,000. Today, it's worth $74,000, according to Zillow.

A big chunk of your life savings could end up evaporating if the property you buy drops in value.

In your situation (at retirement age, with modest savings and a dependable pension) I'd think about renting. Let your landlord assume the risk of depreciation! You also won't face savings-eating major expenditures like a new furnace or roof. And, as you get older, if your health changes, and you can't take care of a yard anymore, or need a wheelchair or walker, you can more easily relocate to another rental that better suits your needs.

salmonslayer · #6 11/30/10, 12:50 PM

We just retired this year and had to pay cash for our place because we couldnt get the bank to finance two residences on one peice of property (we have a trailer for the MIL on the property). That took a lot of our nest egg but we were able to turn around and take a mortgage out on the land itself for a ridiculously low interest rate that makes our payment about on par with our electric bill. That has worked great for us and I would recommend you take out a small mortgage since you have stable retirement income.

One of the prime considerations for us was that our mortgage had to be small enough that if something happened to either one of us and the income reduced the surviver could afford to keep the place. We just found that having the money in the bank was worth the small mortgage and you need to remember that mortgage interest rates are at historic lows and are not likely to ever get lower.

Good luck with whatever you decide, its nice you have those options.

Freeholder · #7 11/30/10, 01:03 PM

Sonshine said this: I think I would try to buy a place outright because of the way the economy is going there's no telling what's going to happen tomorrow. At least you'll have a bit more security than someone who is trying to make monthly payments. What happens if something happens to your retirement funds? The Federal pensions and SSI may not be around much longer the way our government is going. At least if you owned the place you could raise some food and not have to worry about where you'll get the money to make payments if you lose your monthly checks.

I totally agree. The world is changing. Those who think it's okay to live with a mortgage, counting on retirement checks from the government, are living in an old paradigm. Never mind 'investment' value of your new home. You need a place to LIVE and a place to GROW FOOD. Preferably one with miniscule property taxes, too, because in some places property taxes can be as much as a mortgage payment. You do not want to risk losing your shelter and your food-growing plot to either a lender or to the local government if you can't keep up with the taxes.

If you can find a place that's already off the grid, you'll be WAY ahead of the game. Definitely make sure you've got water even if the city goes bankrupt and shuts down their water plant. And make sure you end up with good neighbors.

If possible, buy less than you can afford so you do still have a nest egg left. I don't think you'll be sorry later.

Gottabenutz · #8 11/30/10, 01:09 PM

Think also on tax situation on your retirement income and such. Could make an impact

Michael W. Smith · #9 11/30/10, 01:26 PM

If you have enough left in savings after making the full purchase price that you could live on that money for a year or two, I'd just pay cash and not end up with a monthly mortgage.

No matter how small the mortgage is, you are still paying out on interest each month, interest money that is actually adding up to the total purchase price of your house.

Even if you end up with only a $10,000 mortgage, at 4% interest, you would be paying out at least $400 that first year in interest alone. Oh, but you say, that's only $33.33 each month in interest, that's not that much. True, but if that $10,000 is left sitting in a bank account earning you 1% interest (if you can even find that), you are only making $100.00 on your money.

Pay it off and owe NO ONE! Don't be a servant to a lender.

Harry Chickpea · #10 11/30/10, 01:34 PM

Too little info.. We have no mortgage, because that was one of our major goals. We took profit from the house in FL and bought outright. Yeah, value has dropped here, we expected that, but since it was profit to begin with, that doesn't hurt too much.

The bigger advice I have is - Get a survey, and get title insurance for yourself - not just for the mortgage company. Many properties now are in legal limbo. Banks foreclosed without really knowing who "owned the paper." That means as investors try to recoup, there could be some lawsuits.

Also, before investing large amounts, verify that the state homesteading laws don't allow creditors to rip your home out from under you. That is one of the best things Florida has going for it.

Jan Doling · #11 11/30/10, 02:22 PM

There is no peace like the security of owning your own home.

poppyandnan · #12 11/30/10, 02:29 PM

Jan Doling, I agree with your post! There is NOTHING like the security of owning your own home. If every thing else goes downhill, you will have a place to lay your head at night. Your children will have a place to come if it ever comes to that, too.

Narshalla · #13 11/30/10, 03:40 PM

Quote:

Originally Posted by willow_girl

The real estate market isn't stable enough right now to justify a big investment. Five years ago, I sold a house to a lovely young couple for $107,000. Today, it's worth $74,000, according to Zillow.

A big chunk of your life savings could end up evaporating if the property you buy drops in value.

In your situation (at retirement age, with modest savings and a dependable pension) I'd think about renting. Let your landlord assume the risk of depreciation! You also won't face savings-eating major expenditures like a new furnace or roof. And, as you get older, if your health changes, and you can't take care of a yard anymore, or need a wheelchair or walker, you can more easily relocate to another rental that better suits your needs.

I would not recommend this because most rental properties have mortgages out on them, too, and your landlord is using your rent to pay his mortgage (nothing wrong with that, of course, but that's the flow of the money.)

What happens if he has not planned correctly, gets into a financial mess, and stops paying on that mortgage? The place could get foreclosed on and you'd have to find a new place to live -- any you know that this never happens at a good time!

If it were me, I'd figure out how much I needed to pay all my expenses for twelve months, then put the rest on the house. If I had to, I'd take out a mortgage, but I'd keep it as small as I could.

foxtrapper · #14 11/30/10, 03:47 PM

A small low interest mortgage, or be cash strapped.

Hmm, what was the question again?

Ruby · #15 11/30/10, 06:23 PM

It is a VERY GOOD feeling to go to sleep at night and not have to worry that something might happen and we won't have our ss coming in every month and might not be able to pay a mortgage. We did have a ten year note on our place and paid it off 3 years ago. Our taxes are fairly low. Now if something were to happen that the gov. don't have money to pay ss. checks every week. One of us could find enough work to keep up the taxes.

I vote for buying it out right. If you are not buying it for an investment property then it doesn't matter if it loses value because your not planning on selling anyway. If you are planning on just living there a couple years and want to sell and buy somewhere else then I have no advise. We bought our place knowing we would never move again. I'd had enough of that.

jwal10 · #16 11/30/10, 06:34 PM

Sounds like you will have steady income coming in. Keep enough cash for a 2 yr cushion, you can add to savings as you go along. Think of what you will need for the homestead going in, make sure you have that figured in, taxes, upkeep, etc. You will sleep better knowing you have some cushion for a rainy day.

I don't owe anyone and it feels good, but....I would not be happy to owe no one but not have a rainy day fund....James

Maura · #17 11/30/10, 07:45 PM

I'd move to the area you are thinking of and rent for a year or two to see if you really like it. This will also give you the time to look around and price where you want to live for the rest of your life. Then, I'd take advantage of the economic downturn and buy a place. When the economy finally pulls out of this, say in ten years, your rent will go up. Your monthly mortgage payment will not. As far as paying for it all, or mortgaging, you really need to talk to a bank and find out what you will be paying on different amounts and for how long. I would lean towards a mortgage so that I don't have all of my money tied up in one place.

Oggie · #18 11/30/10, 07:49 PM

You should think about moving to Oklahoma.

It will make you seem skinnier and smarter almost immediately.

Wildwood Flower · #19 11/30/10, 08:07 PM

Cash talks. You can negotiate a really good price if you have cash in hand.. Properties are just about as low as one could imagine right now. You are in a very good position.

At the age you are, I would say pay it outright. Then you're done. You can always adjust your discressionary spending, and start putting part of your pension(s) away in a savings account. You'd be surprised how fast the bank accounts can grow, if you don't have a mortgage payment.

Hopefully you will find a place that is priced good enough that you will still have a chunk of savings left.

Hope you find just what you want.

empofuniv · #20 11/30/10, 10:30 PM

Quote:

Originally Posted by Oggie

You should think about moving to Oklahoma.

It will make you seem skinnier and smarter almost immediately.

Bless you Oggie...being as I am an Okie born outside of OKC back in the 40's, and raised in OKC, Purcell and Pryor and Ponca City, I've gone through my last Okla winter. No more changing flats on a cold snowy dirt road or pouring boiling water over the car door lock so I can get the key in it to unlock the car for me.

Besides, with my dh's family having been in Northern OK since the Cherokee Strip Run you can't hardly swing a dead cat in that entire state, most of Tx and some of LA and KS without hitting someone we're related to in some manner or other. When we got married in 68 he had 51 first cousins, and some of the aunts were still having babies. They are a family who followed the "be fruitful and multiply" teachings.

Nope...I'll visit, but not live there again. Even at the thought of seeming skinnier and smarter!!

But thanks for the invite!

Pam
So many recipes, so few cats!