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Retirement home question
Old 08-26-2018, 07:44 PM   #1
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Retirement home question

Im 10 yrs out until ER. Our mortgage pays off in 4 yrs. Our plan is to sell and move to the beach upon retirement. Should I go ahead and purchase the beach house after our current mortgage pays off or wait until we are ready to move which would allow a larger down payment. Also the mortgage interest would help taxes right?
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Old 08-26-2018, 08:08 PM   #2
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Get the beach house either way.

I'm glad you're getting a beach house and not a "retirement home"
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Old 08-26-2018, 08:31 PM   #3
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If you are going to use the beach house some prior to retirement, continue with your buying plan.
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Old 08-26-2018, 08:45 PM   #4
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I’m 10 yrs out until ER. Our mortgage pays off in 4 yrs. Our plan is to sell and move to the beach upon retirement. Should I go ahead and purchase the beach house after our current mortgage pays off or wait until we are ready to move which would allow a larger down payment.
Do you want to have two homes simultaneously?
Will you be able to use them both pre-retirement such that it's worth the extra expenses?

We currently own two homes. But we use our beach home every weekend and virtually every vacation.

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Also the mortgage interest would help taxes right?
It might. And it might not.
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Old 08-26-2018, 09:08 PM   #5
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I would wait unless a great deal on the ideal beach house pops up while youre still working.
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Old 08-26-2018, 09:34 PM   #6
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t. Also the mortgage interest would help taxes right?
It may not. With the new standard deduction of $26 K, it may not help at all. With all my charitable deductions, state tax, etc. I cannot come up to that number.
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Old 08-26-2018, 09:41 PM   #7
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I'd think about waiting, because sometimes things change. It might turn out that you don't even want a beach house by the time you retire.
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Old 08-26-2018, 11:44 PM   #8
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Keep in mind that it can be much harder to qualify for a mortgage in retirement.

See this article in the NY Times:
Mortgages for Seniors? Available, but Exacting
https://www.nytimes.com/2017/06/02/b...etirement.html
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Old 08-27-2018, 02:14 AM   #9
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Do you think the area in which you plan to live will continue to increase in housing prices, or do you think it might drop over the next decade?

Plan accordingly.
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Old 08-27-2018, 04:36 AM   #10
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Also the mortgage interest would help taxes right?
Well, "if" you can deduct the interest, then you could lower your tax bill yes. Of course, you'll still be paying far more interest than what you'll save on your taxes... it'll just go to the bank instead of the government.
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Old 08-27-2018, 06:17 AM   #11
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Well, "if" you can deduct the interest, then you could lower your tax bill yes. Of course, you'll still be paying far more interest than what you'll save on your taxes... it'll just go to the bank instead of the government.
+1. It wont save you money overall no matter what it may do to your situation. Whether you want to own and use two homes is a personal decision, doesnt matter what wed do.
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Old 08-27-2018, 07:51 AM   #12
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Im 10 yrs out until ER. Our mortgage pays off in 4 yrs. Our plan is to sell and move to the beach upon retirement. Should I go ahead and purchase the beach house after our current mortgage pays off or wait until we are ready to move which would allow a larger down payment. Also the mortgage interest would help taxes right?

Keep doing what you are doing.

With a larger down payment, realtors will pressure you into buying a more expensive house than what you had planned.

Do you 'want' to be servicing a mortgage in retirement?

Mortgages do help with income taxes, but that you drive you toward staying employed.

Ten years before my retirement date, we were designing our retirement home. Once a year I pulled out the floorplans, they covered out kitchen table and we had a week-long conversation, re-drawing the floorplans.

I think it helped to solidify my 'retirement' in the minds of myself and my wife, but also with our children.

By the time that I finally retired, we had those floorplans in hand as we built our farmhouse.

I would never want to have a mortgage as a retiree.

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Old 08-27-2018, 11:29 AM   #13
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I was in your situation, but closer to FIRE, 2 years ish. I didn't want a mortgage in retirement. We found the perfect retirement property on which to build and I didn't want to liquidate other investments and incur capital gains so...

I figured out at what rent level I could actually save money when considering property taxes, HOA's, etc and we set out to find a rental under that amount. It wasn't that hard and we put our house on the market. It sold right away.

So we are in the process of finalizing our construction plans. The house equity is sitting in a prime money market account ready to pay for the new house and we have little worries right now, because we're renting.

Some may think we're nuts for moving twice, but it was a great economic decision and we don't mind having less stress in our lives right now.
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Old 08-28-2018, 06:47 AM   #14
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Thanks to all for your comments.
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Old 08-28-2018, 09:59 AM   #15
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I'd think about waiting, because sometimes things change. It might turn out that you don't even want a beach house by the time you retire.
+1. Or by then you might have mobility or medical needs, or all kinds of other changes that would make a different house, even in the same area, the one for you. Invest the money so that hopefully even if real estate prices rise, you've kept up with it through investments.
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