Mortgage help, please and thank you :-)

[BigBob]

Another consideration, albiet minor (after having been through this recently) against a mortgage is the abundance of fees when it comes time to buy/sell the house. Lenders require xxx, which costs money to you. (xxx - things like title insurance, documentation fees, yyy fees, survey fees, appraisal fees, not sure of which of these in your situation, but hopefully you get the drift). To me, there is freedom owning my house without a mortgage.

 

[daylatedollarshort]

We have tried to liability match our retirement funding, so we took our mostly non-cola pensions as annuities, and have them offset in part with a fixed rate mortgage.

 

[canuck5]

I do appreciate all the advice! I'm now leaning towards, just paying cash, which was my original plan. I knew there was lots more to consider!! Thanks!!!!

I've ridden the markets roller coaster from the Spring of 1987 and I really should be riding in that fishing boat now and not worrying about trying to make that extra % or 2, that will likely be left to the nieces and nephews.

 

[jfn111]

Well I never figured you would "get" a mortgage. If the banker is considered a "mortgage lender" then I just assumed he would lend you one of his.

Great answer

 

[Scuba]

I'm in the camp of keeping our mortgage in retirement. If you have enough predictable cash flow that you're confident you can make the payments, and your investments are likely to return well above your mortgage interest rate, it makes sense to carry mortgage debt IMHO.

 

[Sunset]

I'm in the pay cash group, because unless you itemize your taxes now, there will be no deduction benefit from the mortgage vs standard deduction on income tax.

 

[athena53]

I'm in the pay cash group, because unless you itemize your taxes now, there will be no deduction benefit from the mortgage vs standard deduction on income tax.

And, if Canuck is Canadian, there's no mortgage interest deduction in Canada, anyway.

DH and I still have a lot of medical deductions ($12k per year in premiums alone) and charitable donations that we can itemize. We paid zero Federal in 2015 (yeah, I need to do a Roth conversion this year) but it still helped on the state taxes.

 

[euro]

I'm in the pay cash group, because unless you itemize your taxes now, there will be no deduction benefit from the mortgage vs standard deduction on income tax.

I agree - people get so hung up on "missing out on that interest deduction". Yes, that deduction is nice IF it even makes sense for you to itemize. I'd guess that for many retirees it doesn't, so that perceived upside of a mortgage is a moot point. I know of course, that borrowing at 3% and investing at 9% is attractive (that's why margin accounts exist), but a lot of people don't GET 9% and as others have noted, this strategy completely ignores the significant added risk of leveraging.
I have nothing against mortgages per se - I currently hold 10 (yep 10) of them, but there are a lot of details that need to go into this decision, and depending on your numbers, it may very well not be worth the trouble and risk for you. In spite of the seductively low interest rates.

 

[SumDay]

canuck5, we downsized last year and are about the same age as y'all.

We put 70% down, and took out a small mortgage at 3.75%. I just didn't want to touch our "cash" right now. It could have been a cash transaction, but the payment is less than a car payment, and I double up on the principal each month so it will be paid off quickly.

It took me a while to get used to having a mortgage again as our old house had been paid off for ~10 years. My biggest annoyance was the mortgage company made me put the insurance & taxes in escrow. I'd managed to pay them for 10 years without anyone babysitting those funds each month, but that's the only way any lender would do it. I get it, and I'm over it. One way or the other, I have to pay them. Now a bigger chunk goes to one place, instead of two.

Good luck! I don't think there's a right or wrong answer here - it's whatever you're comfortable with.

 

[Sunset]

canuck5, we downsized last year and are about the same age as y'all.

We put 70% down, and took out a small mortgage at 3.75%. I just didn't want to touch our "cash" right now. It could have been a cash transaction, but the payment is less than a car payment, and I double up on the principal each month so it will be paid off quickly.

It took me a while to get used to having a mortgage again as our old house had been paid off for ~10 years. My biggest annoyance was the mortgage company made me put the insurance & taxes in escrow. I'd managed to pay them for 10 years without anyone babysitting those funds each month, but that's the only way any lender would do it. I get it, and I'm over it. One way or the other, I have to pay them. Now a bigger chunk goes to one place, instead of two.

Good luck! I don't think there's a right or wrong answer here - it's whatever you're comfortable with.

I always avoid the escrow for insurance or taxes when possible. The reason besides losing the interest on the money which is worth nothing these days, is there are lots of stories of the mortgage company screwing up the tax or insurance payment. Either being late (penalties) or failing to pay (tax sale of property).

 

[Souschef]

I'm in the pay cash group, because unless you itemize your taxes now, there will be no deduction benefit from the mortgage vs standard deduction on income tax.

Agreed. When I retired, the housing market was still slow, so I turned my condo into a rental. There was enough equity to get a HELOC which I used to buy our new home outright. Since the loan was against the rental, I could deduct it against my income from the rental. i could still take the standard deduction on my 1040.

 

[Trawler]

For those who want to get fixed rate mortgage in retirement with no reliable income.
Fannie Mae and Freddie Mac will consider retirement assets to determine income. On a 30 year mortgage they will take your nest egg and divide by 360 to calculate an income as long as you can access the nest egg with out penalty. So if you are 59.5 years old and have say 1,000,000 in tax differed accounts they will credit you with income of $2,770 per month. If you have non tax differed investments they treat the same with out the 59.5 age rule. Most Loan reps do not no this tell them to look it up in the underwriting guidelines. In my case we were not 59.5 thus thru JPM Private Client they waived and made an exception the 59.5 rule due to credit , over 50% down and our relationship with them.

 

[daylatedollarshort]

Our experience is that credit unions seemed more flexible on looking at assets and accepting a reasonable expectation of portfolio income in retirement. We had no problem getting a mortgage in semi-ER. We did have to provide copies of our retirement account with balances as part of the documentation.

 

[karen1972]

Another consideration, albiet minor (after having been through this recently) against a mortgage is the abundance of fees when it comes time to buy/sell the house. Lenders require xxx, which costs money to you. (xxx - things like title insurance, documentation fees, yyy fees, survey fees, appraisal fees, not sure of which of these in your situation, but hopefully you get the drift). To me, there is freedom owning my house without a mortgage.

Maybe its just me but most of the fees you refer to id pay even if paying cash other than the lender fee which was like $1500. Title insurance,surveys, inspections including radon..yep..had too many situations where these things protected me.