Why Mortgage When Downsizing? - Page 3

151949 · ‎03-09-2010

@MomCat wrote:
I've never understood the "tax benefits" of paying on loans vs the security of not owing anyone. Sure a different way of thinking from mine.

@MomCat If you are doing well with your investments it is wiser to leave your money there - earning more money - because the interest rates are low now. So your money earns more than the cost of borrowing money. Also you have the benefit of the tax deduction on the interest. You still "own" your home - you just have a mortgage like almost everyone in America.Many seniors have very small mortgages . Not the whole enchilada - just maybe 20 to 30 % of the value of the home. Just to have a little nicer home than they could have if they paid cash. If they can afford it - why not?

software · ‎06-08-2016

I still shake my head over people who buy a car and finance it for years & years & years, even at zero interest.

If you think of financial decisions like a flow chart, you start with the very simple basic decision. If it increases in value, get a loan, if it decreases in value-- don't.

Then you keep goinig further into the decision making, such as tax advantages, personal income & assets, lifestyle, age etc.

I understand why people with no children live in a rather large house in a district with high monthly escrow = LIFESTYLE. They probably like families. They like the amenities that families require. Good schools often means good fire & police protection, trash removal, convenient shopping and so on.

A mortgage when downsizing can be the right decision at the right time for the right person, but not everyone. Many people make decisions without thinking it through or persuing other options. "you buy a house, you get a mortgage" Well, there are other possibilities. And there are other options besides a 30 year mortgage.

chrystaltree · ‎05-10-2010

I've always wondered about that too. No way would I ever...ever have mortgage in my retirement years. Hubby and I sold our house when the girls went on their own, we downsized to love condo but we paid cash for it. We're working and will work for quite some time but it felt so good to be free of a mortgage. Our friends did who are in our age bracket did the opposite. Sold their house and built a gorgeous "mini mansion" but they have hefty. I suppose there is no right or wrong, it's just a matter of how people want to live.

151949 · ‎03-09-2010

@software Not ALL mortgages are for 30 year term. Not ALL mortgages are fixed rate - in other words there are MANY ways to mortgage a home beside a 30 year fixed rate mortgage.

scatcat · ‎03-15-2010

@september wrote:
Mortgage interest is tax deductible, rates are still low (but starting to go up), and for many, the rate of return on investments is higher than what they pay on that interest.

Bingo

software · ‎06-08-2016

And there are other options besides a 30 year mortgage.

@151949 wrote:
@software Not ALL mortgages are for 30 year term. Not ALL mortgages are fixed rate - in other words there are MANY ways to mortgage a home beside a 30 year fixed rate mortgage.

See my sentence above?? That's exactly what I said in my earlier post

@151949

Tinkrbl44 · ‎08-23-2010

@KarenQVC wrote:
Thank you all for your responses. I guess I'm really asking when people have the opportunity to get a small house that will not strain them during retirement, why do they add to stress by buying too much house?

@KarenQVC

Rather odd assumption, IMO.

Why are you even asking, without even knowing anyones' financial situation? I realize it's a general question, but why would you think that means they are "adding to stress"?

I know one couple approaching retirement that thought they would "travel the world", but it's a lot less safe than it used to be. As a result, they are thinking about getting a great new retirement home they can enjoy, with extra bedrooms for the grandchildren. I'm guessing they probably won't put down an excessive amount of cash ..... in many cases, it's really better to keep cash liquid (or semi-liquid) and get enough term life insurance to cover the balance due on the house, among other things.

I recall reading an article about trends in home buying and that many Baby Boomers have decided not to scale down. Factors included low interest rates and personal preferences. Not everyone wants to spend their retirement years in a tiny home.

151949 · ‎03-09-2010

For some people, even though it may be a wiser financial move, they just would not be comfortable having a mortgage. In that case , it would not be the best idea. You certainly need to take your personal comfort zone into consideration, along with the money aspect.

151949 · ‎03-09-2010

@Tinkrbl44 wrote:
@KarenQVC wrote:
Thank you all for your responses. I guess I'm really asking when people have the opportunity to get a small house that will not strain them during retirement, why do they add to stress by buying too much house?
@KarenQVC

Rather odd assumption, IMO.

Why are you even asking, without even knowing anyones' financial situation? I realize it's a general question, but why would you think that means they are "adding to stress"?

I know one couple approaching retirement that thought they would "travel the world", but it's a lot less safe than it used to be. As a result, they are thinking about getting a great new retirement home they can enjoy, with extra bedrooms for the grandchildren. I'm guessing they probably won't put down an excessive amount of cash ..... in many cases, it's really better to keep cash liquid (or semi-liquid) and get enough term life insurance to cover the balance due on the house, among other things.

I recall reading an article about trends in home buying and that many Baby Boomers have decided not to scale down. Factors included low interest rates and personal preferences. Not everyone wants to spend their retirement years in a tiny home.

Some very good friends of ours raised 2 children in their small home but now they have 8 grandchildren. They bought a LARGER home for retirement to accomodate their growing family.

truffle · ‎01-04-2016

@september wrote:
Mortgage interest is tax deductible, rates are still low (but starting to go up), and for many, the rate of return on investments is higher than what they pay on that interest.

Yes but one still has to come up with around $3000 each month to pay their loan (depending on where you live). Who cares about the tax deduction at that point.....not me! I want to be debt free when I retire.