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Bronze Conversationalist
Posts: 23
Registered: ‎07-05-2013

Re: Purchasing a Home After Retirement

Message 11 of 22 (2,271 Views)

I retired on December 31, 2011. We were living in our first home purchased in 1985. When we purchased it with my VA loan, it was a fixer upper, and we totally remodeled it over the years. We paid $95,000 for it in 85, and when I retired it was worth about $450,000. We purchased our new home six months before I retired, and moved in on January 1, 2012.

 

We rent out the original home for $2,600 a month, and it pays both mortgages. I got another VA mortgage for a ridiculous 2.75% interest rate and no money down, so I don't pay any extra principal on the mortgage for the new home. Our original mortgage will be paid off in two years. Once it is paid off, we will stop renting it out and claim it as our second home for a couple of years to avoid capital gains. In the meantime, we keep upgrading every time a tenant moves out. We have a new tenant and just relandscaped the front yard to go to a water-wise landscaping to minimize water use.

 

Almost all financial advisers will tell you to pay off your mortgage before you retire, but all situations are different. I am very lucky in that I have a great pension, great health insurance, and I have not started drawing my SS yet. I am 67 and will hold off until I'm 70 to claim SS. By waiting my SS payment will be $2,880 per month approximately, instead of $2,200 per month, again approximately. I don't remember the exact figures off hand. My wife will be 66 in August, and she will claim her SS, and I will file and suspend and claim my spousal benefit under her SS. Hopefully, I will live as long as my family elders, who have lived into their late 80s and 90s. 

Conversationalist
Posts: 5
Registered: ‎04-08-2013

Re: Purchasing a Home After Retirement

Message 12 of 22 (2,399 Views)

After a lifetime of working and paying ever higher rent in NYC, I realized I had to buy a home for retirement in a place with much lower living costs. I managed to buy a nice condo in 55+ community in Florida with a  mortgage. I closed only 3 months before I found out I was being forcibly retired. I was very lucky. With the cash I had, I would have been able to afford only a small unrenovated condo in a community without amenities. For anybody nearing the dangerous ages, look around and buy something while you are still on a payroll  or still receiving payment for work and can get a mortgage. Since Im alone and don't drive, it was vital for me to find a community with private bus service around and to shopping and doctors. Even if you drive now, bus service will come in very handy later in life. And you make friends on the bus.  

Bronze Conversationalist
Posts: 26
Registered: ‎06-14-2014

Re: Purchasing a Home After Retirement

Message 13 of 22 (2,657 Views)

We lived in South Central Texas and the heat and water shortage finally caused us to start looking for a new place to live.  We are both retired for some time with very good pensions, social security, and military healthcare for life.  We didn't have anything to keep us there so we pulled out a map and started looking for a state where we wouldn't have snow, near our friends on the East Coast and not far enough South that we would have the high temperatures.  Without ever having been there, we picked South Carolina near Hilton Head Island. 

 

We flew out to check the area and loved it.  We purchased in a development and had the house built that we wanted.  It cost about $150K more than what we sold our house for.  We chose a 15 year fixed mortgage.  The payment was $2.2K but we wanted to pay it off sooner so we've been paying $4.2K per month.  We'll have it paid in another couple of years.

 

We have learned two things with this move.  First, make sure your payment doesn't cramp your cash flow.  In a couple of cases, we have not had the cash flow to take advantage of some deals.  Of course we could have held back the extra $2K but my wife is totally fixated on paying off the mortgage.  Second, check out the active senior living communities.  After we had purchased this home we learned of the one closest to us.  We volunteer several times a year and we usually are volunteering with people from the community.  I think if we had thought to check that out, we would have purchased a home in that community.  Perhaps in a couple of years we will sell and move to the active senior living community.

Silver Conversationalist
Posts: 36
Registered: ‎11-14-2012

Re: Purchasing a Home After Retirement

Message 14 of 22 (2,943 Views)

Why the loan?  If you think you might be short, tack more on your mortgage. They are always much lower than any other kind of loan.  After a mortgage your crediit score might dip for a few years so take it while the getting is good.  Enough of my envestments are liquid enough to take care of any needs I might have. My account always has that kind of cash to take advantage of a bargin. 

Silver Conversationalist
Posts: 36
Registered: ‎11-14-2012

Re: Purchasing a Home After Retirement

Message 15 of 22 (2,661 Views)

I agree.  I could pay off my house but then I lose one of my last tax lop holes.  Since my interest is a rightoff and I made almost 5 times on my investement than at my record low mortgage rate it would be pure stupidity to pay off the mortgage.  We will probably buy a winter home in the FL keys with another mortgague.  It isn't hard to get a mortague with a large unearned income and a healthy down payment. 

Conversationalist
Posts: 6
Registered: ‎10-10-2012

Re: Purchasing a Home After Retirement

Message 16 of 22 (2,792 Views)

From the experience of my parents who used to live in a split-level home, it is important to find a place that is senior-friendly.  For those who are over 70, it is increasing difficult to climb stairs even it means only a couple of steps up or down.  Unfortunately, almost all the new homes built today are not friendly to seniors.  It is very costly to upgrade existing homes to accommodate needs for seniors.   Buying a house with senior requirements in mind is a good alternative as long as it does not ruin a person's financial well-being.

 

From my own experience as an investor, it is always a good idea to invest in rental properties as long as you do it prudently.  Cash flow must be positive and the outlook in rental market is good.  Rental property profolio could function like a growth and income asset if it is managed properly.  However, there are risks involved and these risks could be devastating to senior investors.  Local real estate markets may crash and rental demand can decrease.

Info Seeker
Posts: 2
Registered: ‎07-06-2011

Re: Purchasing a Home After Retirement

Message 17 of 22 (2,924 Views)

We downsized to a slightly smaller home after retirement in a town in our home state. I took out a mortgage and then a slightly larger one when I added a sunroom--something I had always dreamed of. Our primary residence is in a clustered home community with a 9-hole golf course and a community pool. We don't golf, but I regularly swim in the summers. We also purchased a second home in a Western state with warmer weather in the winters and spend about 5 months there. We took out a small mortgage on that home too. The payments (Principal, Interest & Taxes) on the two homes combined are around $1500. The notion that we should be mortgage free in retirement makes no sense to me. Without the mortgage interest and property tax deductions, we would pay far more in income tax. I think renting is a good idea if that isn't an issue for you, but for us, having a place in our home state, close to lifetime friends and relatives, as well as a "snowbird home" is just what we need. When the time comes that we can no longer make the cross country trek each year...well, we'll just hunker down in the winters and stay in our home state, possibly selling our home and moving to a 55+ condo community.

Conversationalist
Posts: 9
Registered: ‎05-30-2016

Re: Purchasing a Home After Retirement

Message 18 of 22 (3,271 Views)

We recently sold a two story home because we couldn't handle the stairs, high maintenance upkeep and yard work anymore; we started looking for a  single level home with a small yard along the lines of a patio home but quickly discovered that unless we had a single level home built we would end up buying a cookie cutter smaller house with no appeal and a larger yard than we wanted with expensive HOA fees for amenities we didnot want or would ever use in the community.  We ended up putting the proceeds from our home sale away and renting a nice apt. for now because it's easier to pick up and leave if things don't work out without having to worry about selling another house later in life which is very expensive when you take into account the yearly HOA fees, property insurance and taxes + home maintenance upkeep if something broke or needed repairing.  I think we will not buy another home and continue to rent instead because to me, non home ownership later in life = freedom without being tied to  a home we may end up selling again if it becomes too much of a burden.  I always remind myself that even though you are buying it; if the home has a mortgage, you are still pretty much renting the home from the mortgage company until it is fully paid off.       

Regular Social Butterfly
Posts: 488
Registered: ‎02-22-2011

Re: Purchasing a Home After Retirement

Message 19 of 22 (3,354 Views)
Take out a new loan for the 30 k when you buy the new place. Interest rates are still low and as long as the payments on the loan do not cramp your style - go for it. For the time being - leave your investments alone. Later on - if you get tired of the payments - And you are in a good position to liquidate a small part of your investments, i.e. you have a decent gain - take the gain and payoff the loan. :-)
Trusted Social Butterfly
Posts: 7,098
Registered: ‎02-14-2008

Re: Purchasing a Home After Retirement

Message 20 of 22 (3,233 Views)

Opinion from myself and friend who has been doing real estate for several decades. You cannot view the house as an investment, regardless of what is happening now, because real estate is up-and-down, same as the stock market. Now, if you're ready to possibly take a substantial hit, should you need to sell, and the market is bad at that time, then of course, you're free to do so.

   We're (real estate guy and I) both of the opinion, and DW and I are going to do this, is to rent. We have a house, paid for, but will be difficult to maintain as we get older. We'll sell, use the proceeds to rent something (the sale should cover us for a very nice place for a lot of years).

    But, only you can determine your finances and how you wish to spend money. We're also of the opinion that we just don't want to make the effort, as we get into our 70's, to do all the work to maintaining a house, including calling others to do the work. Just too much burden for us. 


Just think. The world was built by the lowest bidder.