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Old 06-26-2017, 05:25 AM   #61
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Originally Posted by Starsky View Post

There is a point in retirement where a new 30-year fixed cash-out mortgage starts to look pretty good (especially with interest rates being so low), since you can use all the proceeds for whatever you want now, and there's no chance you'll ever pay it off in your lifetime. For seniors, it's almost like a reverse mortgage except for they make you take all the money now.
Except you don't have to pay back a reverse mortgage until you die of sell the house. Regular mortgages are paid monthly and would be a "drag" on your monthly cash flow. Many people use undrawn home equity loans for possible emergencies. Probably more flexible?
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Old 06-26-2017, 05:52 AM   #62
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I just like having one less thing to worry about, that would be my overall deciding factor.
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Old 06-26-2017, 07:15 AM   #63
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With substantial equity, a standby HELOC is good to keep in place.
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Old 06-26-2017, 07:38 AM   #64
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I just like a peace of mind in my retirement. I don't want to think about watching a calendar in order to pay any house or car payment on time. When a bill hits the mailbox, I pay it online immediately and toss the paper away. I seldom even pay that close of attention to my cash balances--as there's enough funds there to cover my expenses.
Is your peace of mind affected by paying insurance, taxes, etc?

Almost all bills can be paid automatically these days - automatically withdrawn each month from your checking/savings account, even if your accounts are with other banks.

Instant peace of mind while retaining all of your liquidity.
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Old 06-26-2017, 07:56 AM   #65
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Is your peace of mind affected by paying insurance, taxes, etc?



Almost all bills can be paid automatically these days - automatically withdrawn each month from your checking/savings account, even if your accounts are with other banks.



Instant peace of mind while retaining all of your liquidity.


+1
Liquid assets give me peace of mind. We have a lot of equity in our home but still have a mortgage and small HELOC for about 1/3 of the value of it. Could pay both off from assets at any time, but we prefer the liquidity and payments are not a large percentage of our spending.

This is truly a YMMV issue with no "right" answer. Some of us like to have more assets and some of us like to reduce or eliminate debt.
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Old 06-26-2017, 07:59 PM   #66
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Really makes no difference (except the way it's handled) with a Roth or just taking the money - same calculation. You will still owe the taxes on what you take (assuming you're not at zero tax).



)

Thanks for thoughtfully responding to my questions, Koolau. If we do pay it off from deferred funds, regardless, it makes sense to wait until after FIRE when we'll be in a lower tax bracket. Or maybe we'd sell and downsize, which is another way to eliminate a mortgage. I had not considered RMDs at all as a factor in paying off the mortgage but, of course, reducing the RMDs through paying off the mortgage would indeed be a major incentive, just as it is with Roth conversions.
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Old 06-27-2017, 02:36 AM   #67
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you can't spend the living room . whether a house is worth 1 million dollars or 100k is irrelevant as long as you consume it yourself .

i never count a house for anything except when i would want to feel good about total net worth .

it is an expense like any other bill until the day comes it is sold .

don't forget safe withdrawal rates assume value can be spent down to a dollar at the end of 30 years .

the mortgage is an expense to cash flow .

a senior who goes from a 3 bedroom apartment when the family moves out to a 1 bedroom can see even better cash flow than that owner
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Old 06-27-2017, 07:20 AM   #68
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don't forget safe withdrawal rates assume value can be spent down to a dollar at the end of 30 years .
I think this may be key in the argument about how to view home ownership. Technically it's part of net worth, but realistically it's not part of invested assets for purposes of determining SWR. YMMV
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Old 06-27-2017, 12:48 PM   #69
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I grapple with this question quite a bit. In the end, at this point in my life (plan is to FIRE in 2024) anything I put into the house I view as an alternative to a savings account. One reduces the interest that I pay and the other pays me very little interest. My plan is to significantly downsize in retirement to a lower COL area, so much of this (less the cost of the new house) will come back to me and be added to my nest egg.
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