Why Mortgage When Downsizing? - Page 5

Maudelyn · ‎09-08-2016

@esmeraldagooch wrote:
@151949 wrote:
@truffle wrote:
@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.
As i previously stated - not all mortgages are 30 year fixed rate - there are many many types of mortgages. Also , not everyone mortgages the whole amount - esp. seniors often only mortgage as much as they need to step up into a nicer home than the one they are selling. For instance - we are looking to get out of a villa into a new stand alone house. We don't want to take the money from our investment account so we will mortgage about 15% of the total cost of the home.We estimate our payment would be about $400 at the 4% interest our builders mortgage co is asking. We haven't even shopped around yet to see if there are better deals available.When you are putting down 85% they tend to give you a pretty good interest rate.
I have never seen a mortgage company finance a home under $100,000.00 with a conventional loan does yours fit that criteria?

Most mortgage companies and banks have a $50k minimum.

151949 · ‎03-09-2010

@itiswhatitis wrote:
@esmeraldagooch wrote:
@151949 wrote:
@truffle wrote:
@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.
As i previously stated - not all mortgages are 30 year fixed rate - there are many many types of mortgages. Also , not everyone mortgages the whole amount - esp. seniors often only mortgage as much as they need to step up into a nicer home than the one they are selling. For instance - we are looking to get out of a villa into a new stand alone house. We don't want to take the money from our investment account so we will mortgage about 15% of the total cost of the home.We estimate our payment would be about $400 at the 4% interest our builders mortgage co is asking. We haven't even shopped around yet to see if there are better deals available.When you are putting down 85% they tend to give you a pretty good interest rate.
I have never seen a mortgage company finance a home under $100,000.00 with a conventional loan does yours fit that criteria?

@esmeraldagooch it's difficult but it can be done.

It's not at all difficult. When we bought our current house we mortgaged it for $50,000 because they were offering to pay the closing costs if you got a mortgage with them. We paid it off in 2 months and saved $7000 in closing costs.

Mominohio · ‎08-08-2010

@truffle wrote:
@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.

Wow, I can't imagine living in a house that required a $3000 payment. In my area, with 20% down, you can live in the nicest of neighborhoods in a reasonably nice home for well under $1000 a month. Many moderately nice areas around here, less than half that. Around here, it doesn't pay to rent. You can buy three times what you can rent for half the price.

Maudelyn · ‎09-08-2016

@Mominohio wrote:
@truffle wrote:
@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.

Wow, I can't imagine living in a house that required a $3000 payment. In my area, with 20% down, you can live in the nicest of neighborhoods in a reasonably nice home for well under $1000 a month. Many moderately nice areas around here, less than half that. Around here, it doesn't pay to rent. You can buy three times what you can rent for half the price.

Average home price in the US for March 2017 was $388k, according to census.gov. In many areas, you can't rent a decent room for under $1,000 a month.

DiAnne · ‎09-22-2010

I have a very good friend in Southern California who sold her home and down sized to a condo and with the rest of the money purchased a very nice rental house. She has no mortgage on the condo just HOA fees and the rental gives her $2,300 in extra retirement income.

Edited to add that is $2,300 extra a month.

suzyQ3 · ‎03-09-2010

Very interesting thread, OP.

It really boils down to your own wealth and your own comfort zone. I tend to have to fight with myself about the latter, having seen my parents lose their home for both their fault and factors not their fault. I'm in no way cheap, but I have this fear that I'll hear that doorbell ring again. Jeez, back then creditors had no boundaries.

But I am trying very hard to adopt the philosophy that you can't take it with you. This idea that we should end up without any debt whatsoever is one thing, but if it denies you certain aspects of life that you might otherwise comfortably enjoy, heck no.

.

~Who in the world am I? Ah, that's the great puzzle~ Lewis Carroll, Alice in Wonderland

151949 · ‎03-09-2010

We have no one to leave our money to so why shouldn't we spend it to make ourselves happy? Heck, even if you do have kids - you should not live poor just to leave them a bundle.

itiswhatitis · ‎05-27-2016

@Mominohio wrote:
@truffle wrote:
@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.

Wow, I can't imagine living in a house that required a $3000 payment. In my area, with 20% down, you can live in the nicest of neighborhoods in a reasonably nice home for well under $1000 a month. Many moderately nice areas around here, less than half that. Around here, it doesn't pay to rent. You can buy three times what you can rent for half the price.

This can be easily found in most of New York City; Westchester, Long Island and so on in New York State. This monthly mortgage amount is nothing. Brownstones in some of the boroughs cost upwards of $1MM or more @Mominohio

I think San Diego, San Francisco, Los Angeles, Chicago, DC and suburbs would easily cost this on a monthly basis. I can imagine living in an exclusive enclave with million dollar homes but I'd be dreaming. LOL.

*Call Tyrone*

itiswhatitis · ‎05-27-2016

Here's some reading about mortgage loans less than $100,000.....

Any way you look at it, $100,000 is a lot of money. But in the world of mortgage loans, it's not much money and the low amount can make getting a loan more difficult instead of easier.

For homebuyers in rural or other low-cost areas, or people buying small vacation properties or refinancing low loan amounts, loans for less than $100,000 can be difficult to get and sometimes impossible from major lenders. There are other options, such as small lenders and credit unions, but borrowers will likely pay higher interest rates.

"Mortgages under $100,000 are difficult to get," says Adam Funk, a certified financial planner in Troy, MI. "That is about the break even point where revenues and expenses to process a loan meet. If a broker can't earn enough revenue to cover the expenses then she wouldn't do the deal."

A rookie mortgage broker might work on the deal for the experience, Funk says, or a local bank or credit union may do it with the hope of the customer using its other services. Or the banker may work on salary instead of commission, keeping expenses down.

Small loan may not cover bank's costs

"If you're looking for only a $50,000 mortgage, expect to pay a higher interest rate than published rates and plan to cover the closing costs yourself out of pocket," he says. "Figuratively speaking, there is a lot of paper to be pushed to transact a mortgage, it doesn't matter how large or small the loan amount.

Just the office and wage expenses to originate the loan might be at least $3,000, says Funk, who gives the example of a $50,000 loan at 4 percent interest earning only $2,000 per interest per year. That might not be enough to cover a bank's origination and annual administrative and compliance expenses for a loan, he says.

Government regulations limit how high of an interest rate a bank can charge, so small-loan borrowers may have to pay more closing costs out of their own pocket, Funk says. That could make consumers balk at such a large expense on an inexpensive house.

There's also the factor that people buying $50,000 homes often have relatively high risk factors, he says. These include lower credit scores, less income, less emergency savings and less collateral value on the house.

https://www.mortgageloan.com/challenge-getting-small-mortgage-9886

*Call Tyrone*

truffle · ‎01-04-2016

@DiAnne wrote:
I have a very good friend in Southern California who sold her home and down sized to a condo and with the rest of the money purchased a very nice rental house. She has no mortgage on the condo just HOA fees and the rental gives her $2,300 in extra retirement income.

Sweet.