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Housing dilemma approaching RE
Old 04-14-2021, 10:57 AM   #1
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Housing dilemma approaching RE

Having a bit of a dilemma around housing. I currently rent in a HCOL area but would eventually like to purchase a place closer to nature. Problem is I知 not sure when that will happen. I have a RE target as soon as this fall, but worry about getting a mortgage if/when I give up the job. I can see myself working for another couple years maybe, but also craving a big change.

I知 sitting on $225k cash because that痴 standard advice is to keep money planned for use in under 2 years. I could see a purchase happening anywhere from 6 months to 5 years since I知 not settled on where.

Should I invest a portion of this or just sit on it? So much is up in the air. Housing keeps going up, which could frustrate my RE budget as well. Feels hard to plan! Thoughts?

Thanks!
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Old 04-14-2021, 11:14 AM   #2
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Have you considered using the cash to buy land, and then build what you want when you want? You can use the land as collateral for the construction loan when you get to building.

This is the path I have chosen, although I did not have the pile of cash so I had to be more creative to pay for the land.
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Old 04-14-2021, 11:42 AM   #3
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Originally Posted by tmitchell View Post
... worry about getting a mortgage if/when I give up the job. ...
FWIW we've been retired for 15 years +/- and will be building a new lake home this summer. A good chunk of the cost will be paid from proceeds selling our current lake home but that won't happen until we move. Rather than pull from IRAs for a temporary need, we just mortgaged the current lake home and it was very straightforward. Lots of hoops to jump through due to all the documentation requirements but we got it done at 2.875%. Our NW is substantially more than the loan, even without considering the collateral. Whether that helped I don't know.

Maybe talk to a mortgage lender (your bank?) now and ask whether your concern is well-founded?
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Old 04-14-2021, 12:03 PM   #4
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I think you should begin by deciding on a firm date to retire, and commit to your inner self that the date is not going to change. Then, you can make your real estate decisions with that in mind. This would simplify things a lot IMO.
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Old 04-14-2021, 12:24 PM   #5
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Step #1 should be taking a little time off and putting the boots on the ground to find where you really want to live.

An alternative would be to retire, sell your current place and go rent in locales where you think you might prefer to live. Then get a permanent place when you find the right place.
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Old 04-14-2021, 12:39 PM   #6
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Having a bit of a dilemma around housing. I currently rent in a HCOL area but would eventually like to purchase a place closer to nature. Problem is I知 not sure when that will happen. I have a RE target as soon as this fall, but worry about getting a mortgage if/when I give up the job. I can see myself working for another couple years maybe, but also craving a big change.

I知 sitting on $225k cash because that痴 standard advice is to keep money planned for use in under 2 years. I could see a purchase happening anywhere from 6 months to 5 years since I知 not settled on where.

Should I invest a portion of this or just sit on it? So much is up in the air. Housing keeps going up, which could frustrate my RE budget as well. Feels hard to plan! Thoughts?

Thanks!
Right now, you have too many moving pieces. You are having both a time (when to stop work) and space (where to move to) problem. If you can settle the space issue by deciding where to move to, then things will be much simpler. Maybe buying a place and getting a mortgage before quitting your job. There has to be some overlapping for thing to work smoothly.
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Old 04-14-2021, 01:58 PM   #7
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FWIW my financial advisor said it's harder to get a mortgage if you don't have a job (even if you're retired and have income). I imagine it would be even harder if you don't already own property you can leverage. She advised me that if I wanted to refinance, better to do it before I retired. So your concern is well founded.

Folks here have given some good ideas. You could also potentially buy a place while you're employed and rent or Airbnb it until you're ready to move in yourself.
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Old 04-14-2021, 03:19 PM   #8
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Having a bit of a dilemma around housing. I currently rent in a HCOL area but would eventually like to purchase a place closer to nature. Problem is I知 not sure when that will happen. I have a RE target as soon as this fall, but worry about getting a mortgage if/when I give up the job. I can see myself working for another couple years maybe, but also craving a big change.



I知 sitting on $225k cash because that痴 standard advice is to keep money planned for use in under 2 years. I could see a purchase happening anywhere from 6 months to 5 years since I知 not settled on where.



Should I invest a portion of this or just sit on it? So much is up in the air. Housing keeps going up, which could frustrate my RE budget as well. Feels hard to plan! Thoughts?



Thanks!


Not sure I really understand your question.

That said, here's my answer! HaHa.

Personally I would not "invest" any monies I have allocated to my house purchase if a had a near term horizon.

And certainly under two years would fall into short term for me...
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Old 04-14-2021, 03:25 PM   #9
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If you don't know where you are going and you don't know when you want to be there you will get there exactly when you are suppose to.
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Old 04-14-2021, 03:38 PM   #10
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FWIW my financial advisor said it's harder to get a mortgage if you don't have a job (even if you're retired and have income). I imagine it would be even harder if you don't already own property you can leverage. She advised me that if I wanted to refinance, better to do it before I retired.
We're about to close on a post-retirement refinance, and once the bank saw that we qualified on my pension alone and had a loan-to-value of under 60%, they decided they didn't want information on our retirement assets and income draws.

I suspect that qualifying could have gotten complicated otherwise.
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Old 04-14-2021, 03:52 PM   #11
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Like my ID retire to nature, I am looking forward to moving to nature.

I am not sure if you have some areas in your mind. For me, not yet, and I dont have any family or friends to be closed in us. So, my possibility is too big(even considering out of US).

Actually, it is my big stress these days. I am semi-retired managing rental propertied in STL. I was planning to find land but it is easy to be goof off. I was stressful I may end around here doing nothing because I really want to build my own house. Now, I am moving back to one of my house which I used to live and able to gardening better.

Before retire, I would recommend at least to decide which area you would go, then start to search lands or houses. Other than that, I would say it costs alot until it would be decided.
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Old 04-14-2021, 08:48 PM   #12
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Step #1 should be taking a little time off and putting the boots on the ground to find where you really want to live.

An alternative would be to retire, sell your current place and go rent in locales where you think you might prefer to live. Then get a permanent place when you find the right place.
+1
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Old 04-15-2021, 05:53 AM   #13
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Having a bit of a dilemma around housing. I currently rent in a HCOL area but would eventually like to purchase a place closer to nature. Problem is I’m not sure when that will happen. I have a RE target as soon as this fall, but worry about getting a mortgage if/when I give up the job. I can see myself working for another couple years maybe, but also craving a big change.

I’m sitting on $225k cash because that’s standard advice is to keep money planned for use in under 2 years. I could see a purchase happening anywhere from 6 months to 5 years since I’m not settled on where.

Should I invest a portion of this or just sit on it? So much is up in the air. Housing keeps going up, which could frustrate my RE budget as well. Feels hard to plan! Thoughts?

Thanks!
We're in the same position, and I don't have a good answer for you. For the time being, since interest rates are so low (and probably rising), we just have the cash for a future home purchase in online savings.
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Old 04-15-2021, 11:53 AM   #14
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Thanks all, I'm setting a call with my lender. I appreciate the input!

Also checking out the land option @Sniggle--thanks for suggesting.
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Old 04-15-2021, 12:48 PM   #15
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FWIW my financial advisor said it's harder to get a mortgage if you don't have a job (even if you're retired and have income). I imagine it would be even harder if you don't already own property you can leverage. She advised me that if I wanted to refinance, better to do it before I retired. So your concern is well founded.
+1

That's what Chase told me when I asked about refinancing recently. They want to see regular paychecks, or regular 401k/pension/SS payments.

I mentioned my retirement assets, and they implied that would be doable, probably, but not nearly as straight forward. I got the impression they weren't as interested when I mentioned this, especially now since so many people are trying to do refi's.
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Old 04-15-2021, 12:59 PM   #16
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+1

That's what Chase told me when I asked about refinancing recently. They want to see regular paychecks, or regular 401k/pension/SS payments.

I mentioned my retirement assets, and they implied that would be doable, probably, but not nearly as straight forward. I got the impression they weren't as interested when I mentioned this, especially now since so many people are trying to do refi's.
A large bank like Chase is usually not interested in "non-conforming loans"...they want to turn 'em and burn 'em and the brokers are working on quantity and not quality.

DW's family have friends that own a small local bank (not really too small, there are 5 branches) and they do a LOT of loans that are non-conforming. They don't sell many of them and keep a lot in-house and their 30 year rate is about .15% higher than the big boys. So, try a local CU or smaller bank where they take a more holistic look at R/E loans than the mega-super-big-no-customer-service banks do.
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Old 04-15-2021, 02:23 PM   #17
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I've had no less than three mortgage brokers recently tell me that all I have to do is show scheduled withdrawals from my tIRA direct deposited to my checking account each month, that the funds in my tIRA would need to be sufficient to cover three years of the mortgage payments, and that the down payment would be coming from a different account (like after-tax brokerage account).

With that criteria they could easily qualify me for a 30 year mortgage.

I asked how many months of that income they would need to see. They all said two months and they don't care if I stop the withdrawals after closing. So essentially I can withdraw $15K a month for two months and they'll treat it as though I'm earning $180K a year as long as I have enough in the tIRA to keep doing that for a minimum of three years.
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Old 04-23-2021, 03:20 PM   #18
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I called my last lender and she said I’d need a W-2 to qualify, so I’m going to keep researching.

I’m looking into buying a lot in a desirable area where I could build as a second step. I’m a little concerned about selling off the lot so will have to see.

The more I look into this the more I regret waiting!
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Old 04-25-2021, 04:19 PM   #19
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FWIW my financial advisor said it's harder to get a mortgage if you don't have a job (even if you're retired and have income). I imagine it would be even harder if you don't already own property you can leverage. She advised me that if I wanted to refinance, better to do it before I retired. So your concern is well founded.

Folks here have given some good ideas. You could also potentially buy a place while you're employed and rent or Airbnb it until you're ready to move in yourself.
This is true. For this reason, we opened a HELOC one year before FIREing even though we have no plans to use it. It's there for emergencies.
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Old 04-25-2021, 04:33 PM   #20
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FWIW my financial advisor said it's harder to get a mortgage if you don't have a job (even if you're retired and have income). I imagine it would be even harder if you don't already own property you can leverage. She advised me that if I wanted to refinance, better to do it before I retired. So your concern is well founded.

Folks here have given some good ideas. You could also potentially buy a place while you're employed and rent or Airbnb it until you're ready to move in yourself.
We have been retired since 2015 and had enough cash taken out of our retirement funds to fund till SS at 62. We purchased a house in March 2020. It took a while for our credit union to understand we didn't have monthly income (except a small pension of my DH) coming in because we had been living on money we took out when he first retired. Finally got to talk to a more experienced loan officer and she realized and understood what we were doing. (We had more than (4) times the amount of the cost of the house in our retirement accounts and we could get any amount anytime we wanted.

Long story short, we closed on a VA loan with nothing down. All they ended up using for approval was the amount of the house purchase. All that paperwork to prove we could pay a certain amount monthly went to no avail.

To make life easier, I would start having a certain amount come out of your retirement account monthly. So that will show that you have monthly income coming in and save you some time and frustration getting a loan.

Good luck with it all.
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