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Any advice very much appreciated, thanks.
I am about to have a home built, for $135K, probably 20-25K down, hoping for 5% interest on a 30 year FHA loan. Mortgage, interest, taxes, and mortgage insurance will be around $850/mo. Currently rent for 600/mo.
I'm 54, earn 60K/yr. Plan to retire in 15-20 years. Am a professor invested in TIAA-CREF retirement plan and am told at present if I roll my 403B into an annuity, I will get roughly what I do now after taxes for life if I contribute no extra into retirement. Employer contributes 11%, I contribute 7% and currently no additional to retirement.
I have rented all my life, but am thinking about getting this home in time to get the 8K tax credit. The price on the home is good, I've researched the market here in Las Cruces, NM, for 6 months. The market took a small hit in the last 1-2 years, but not like some places. In this town of 100,000 there are 1200 homes for sale. Sales are now taking off but prices are stagnant or declining at the moment.
My friend feels I would be wiser to rent for life, and put the difference between my rent and the mortgage (~$250/mo) into additional retirement contribution (pretax), as this money earns 20% being pretax, while my mortgage might not earn any due to appreciation and mostly goes to interest.
My goal is to maximize financial security in retirement.
Any advice greatly appreciated. Happy to provide any further info.
Thanks.
Jim
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