I previously posted about our house conundrum:
I always hate it when someone posts a question and gets all sorts of responses and never comes back and tells what decision was made.
For those who didn't read thread:
We will retire soon, own house with mortgage that we want to sell, were considering buying a downsized retirement house and uncertain whether to take out a mortgage before retiring or to withdraw money to pay for it out of retirement funds which would cause a huge hit on taxes (marginal tax rate would be 33 to 35%).
...Sigh. Subject should be House Conundrum Solved. Hit submit too quickly.
I did consider what everyone said, discussed with DH. Solution:
We found a house in a great location. We were able to get it below our initial price range. In fact, for about $100k less than we were prepared to spend. So that gave us more flexibility.
The location is really great and houses sell very quickly in the area. If for some reason we changed our mind I have no doubt we could sell it quickly.
Given the low price of the house, we realized that between some non-retirement money we have now, a bonus DH is getting in a couple of months, and a 401(k) loan (which will not have to be repaid immediately on retirement. That is the loan remains in effect) that only about 1/3 of the purchase price would need to be paid from retirement funds so the tax hit to us wasn't that great.
We were able to contract for a closing 2 months from now. I've decided to likely extend my own retirement until the end of April, maybe some time in May. DH is adding a couple of extra weeks to his plans so that gives us a little more funds.
We are still going to retire even if this house hasn't sold but I've run the numbers very pessimistically and it still works.