- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
How many of you retirees still have a home mortgage (purposefully)? What is your mindset?
Posted on 7/17/21 at 12:18 pm
Posted on 7/17/21 at 12:18 pm
Positive spread,
Investment spread > low interest mortgage
I am planning retirement in next 5-8 yrs. Always favored positive spread over peace of mind re low interest mortgage.
That said, have planned full payoff at retirement start for peace of mind.
However, just refinanced at 2.8% and in working with financial advisor, discovered head room in nest egg (ie, can cover planned retirement expenses with very high confidence, including same mortgage as today and room for error should market bust).
For those who maintain a home mortgage in retirement, please share your mindset for doing so. That peace of mind is hard to ignore no matter what financials say.
Thank you!
Investment spread > low interest mortgage
I am planning retirement in next 5-8 yrs. Always favored positive spread over peace of mind re low interest mortgage.
That said, have planned full payoff at retirement start for peace of mind.
However, just refinanced at 2.8% and in working with financial advisor, discovered head room in nest egg (ie, can cover planned retirement expenses with very high confidence, including same mortgage as today and room for error should market bust).
For those who maintain a home mortgage in retirement, please share your mindset for doing so. That peace of mind is hard to ignore no matter what financials say.
Thank you!
14
Posted on 7/17/21 at 12:33 pm to Turf Taint
I am retiring in 3-4 years. Built a house last year, larger in size, and with more amenities. Went from no mortgage to some mortgage. 15 year, 2.25%.
Previously did not have a mortgage for 8 years.
My thoughts were, I would have to carry the mortgage, which is easily doable, carry one car note, and no credit card debt (i.e. I pay it off monthly) till I'm 62, then let my SS cover my mortgage payment to the end. At that rate, no real interest in paying it off early other than not liking to make a payment.
Being that close to retirement, I figure worst case, I would take enough out at retirement to pay it off if I had to/wanted to when I retire, but I generally do not plan to do that right now. Could change tomorrow though.
P.S. I do not recommend upsizing in house at retirement. However, the wife and I have no heirs, so it's sort of the "spending your kids inheritance" mindset.
Our will state that 25% goes to our church, and the other 75% split among 2 pet shelters we have adopted from.
Previously did not have a mortgage for 8 years.
My thoughts were, I would have to carry the mortgage, which is easily doable, carry one car note, and no credit card debt (i.e. I pay it off monthly) till I'm 62, then let my SS cover my mortgage payment to the end. At that rate, no real interest in paying it off early other than not liking to make a payment.
Being that close to retirement, I figure worst case, I would take enough out at retirement to pay it off if I had to/wanted to when I retire, but I generally do not plan to do that right now. Could change tomorrow though.
P.S. I do not recommend upsizing in house at retirement. However, the wife and I have no heirs, so it's sort of the "spending your kids inheritance" mindset.
Our will state that 25% goes to our church, and the other 75% split among 2 pet shelters we have adopted from.
Posted on 7/17/21 at 1:01 pm to kywildcatfanone
quote:
ur will state that 25% goes to our church, and the other 75% split among 2 pet shelters we have adopted from.
Dad? Is that you?
Posted on 7/17/21 at 2:20 pm to I Love Bama
We had a 15 year mortgage and my wife was adamant we had to pay it off in 10.She even cut her 401-k contribution to 10% from15 to pay it off early.
In hindsight it would have been better to let it go the full 15 years.
We’re doing well financially but we would have done better.But,I guess it is worth it for her peace of mind.
It is somewhat liberating to not have a mortgage,however.
In hindsight it would have been better to let it go the full 15 years.
We’re doing well financially but we would have done better.But,I guess it is worth it for her peace of mind.
It is somewhat liberating to not have a mortgage,however.
Posted on 7/17/21 at 2:39 pm to Turf Taint
The only thing I have to add is some people use holding a mortgage as a sub for bond allocation for retirement as it doesn’t make sense to hold low interest bonds and have a mortgage as your financing a investment in bonds at that point.
Posted on 7/17/21 at 3:43 pm to tigersfan1989
quote:
some people use holding a mortgage as a sub for bond allocation
Substitute? The bond pays you vs. you pay the mortgage, so how is it a substitute?
Posted on 7/17/21 at 3:57 pm to Turf Taint
quote:
For those who maintain a home mortgage in retirement, please share your mindset for doing so. That peace of mind is hard to ignore no matter what financials say.
Wife and I moved to Santa Fe end of October 2020, bought a house mid-December, financed roughly half of purchase @ 2.75%/30 years. Just re-fi'd yesterday with a 1.625% 7 yr ARM, 30 yr amortization, limited closing costs, no appraisal, through Schwab/Rocket. House is roughly up $100k in value since December according to long time RE agent but we have probably put ~ 20k in improvements since purchase.
To me it's a no brainer, we own a shite ton of investments that throw off multiples of what the mortgage rate is and don't see the point in paying it off. We will know within the 7-year fixed rate time frame whether we are staying here longer term and can pay it off then prior to rate re-set or perhaps pay off partially and let it ride depending on future rates and investment environment. Paying under 1k/month on ~ $700k house (no escrow), that's very low cost. I don't care if people agree with the strategy or not, I know it will work out for us. It's rather pointless to lock up all that cash in a house (especially not knowing you will spend 10-30+ years in the house) just to say your mortgage free especially if you have other investments earning significantly more than the interest cost of the mortgage. YMMV.
Posted on 7/17/21 at 4:12 pm to tirebiter
quote:
Santa Fe
quote:
whether we are staying here longer term
Why wouldn’t you? That place is beautiful.
Posted on 7/17/21 at 4:32 pm to Turf Taint
My plan is to remodel my house after my kids leave and sell it, buy/build a smaller one with the cash from the sell. I don't want any more bills when I retire, I want to enjoy every dime retiring and living life while I'm still able to.
Posted on 7/17/21 at 4:38 pm to Turf Taint
quote:
Substitute? The bond pays you vs. you pay the mortgage, so how is it a substitute?
Say at retirement you have a 50/50 stock to bond allocation and you also decide to keep your mortgage. The 50% bond allocation is being held while you have a 2.5% mortgage which to me doesn’t make much sense. Why wouldn’t you just payoff the mortgage instead of trying to beat a small spread between a mortgage and a bond. Now if you put all your retirement funds in 100% stock allocation and keep a fixed 2.5% mortgage you are betting on beating that 2.5% rate with your stock allocation.
Posted on 7/17/21 at 4:40 pm to Turf Taint
My parents moved to FL in 2019. They were retired for at least 5 years at that point.
Their house in GA had been paid off for several years, sold it for $290k but their house in FL they bought was $445k. Instead of just liquidating a lot of investments to pay the difference and getting a huge tax bill, they took a 15 year like 150k mortgage out at a low rate, and they itemize so they can deduct the interest anyways. Just makes more sense this way instead of paying so much in taxes on 150k in pretax investment accounts to pay the difference.
Their house in GA had been paid off for several years, sold it for $290k but their house in FL they bought was $445k. Instead of just liquidating a lot of investments to pay the difference and getting a huge tax bill, they took a 15 year like 150k mortgage out at a low rate, and they itemize so they can deduct the interest anyways. Just makes more sense this way instead of paying so much in taxes on 150k in pretax investment accounts to pay the difference.
Posted on 7/17/21 at 4:54 pm to Turf Taint
"Always favored positive spread over peace of mind re low interest mortgage."
---
Do you guys have a balance sheet?
Low interest mortgage vs. Higher spread investment.
You could easily take your investment and pay it off if necessary. But if it makes you sleep better, you should pay it off.
---
Do you guys have a balance sheet?
Low interest mortgage vs. Higher spread investment.
You could easily take your investment and pay it off if necessary. But if it makes you sleep better, you should pay it off.
Posted on 7/17/21 at 5:03 pm to Turf Taint
Sort of the same boat, but everyone is going to be in a different space. I'm retiring (at 52, but want to find something else to do) in a few months. Bought a new 'gonna die in this house' for more than what I just sold my current house for. Let's say the house I bought was 700k and I sold my current house for 500k, which was paid off. I now have about $400k after all is said and done and about 400k left on the new mortgage. We could come close to paying it off and being mortgage free again.
My financial advisor says that it would be best to put maybe 200k back into house equity, recast our loan to whatever we are comfortable a month paying. If you can get down around the 2.5-2.75% rate, it doesn't make sense on paper to pay the house off. Although the market is shite atm, the money you are paying towards the mortgage could go into any number of investment accounts and earn you far greater wealth that will allow paying the mortgage down later on. Unless of course the market takes a serious dive and all that. But what goes down, eventually goes up again.
It really comes down to wanting the stability of a paid house in the weird times we are in vs building wealth with extra money that you put into the home. Our advisor supports whatever we do, but instead of paying off the house (which was what we wanted initially), we are compromising with his advice and going 50/50.
My financial advisor says that it would be best to put maybe 200k back into house equity, recast our loan to whatever we are comfortable a month paying. If you can get down around the 2.5-2.75% rate, it doesn't make sense on paper to pay the house off. Although the market is shite atm, the money you are paying towards the mortgage could go into any number of investment accounts and earn you far greater wealth that will allow paying the mortgage down later on. Unless of course the market takes a serious dive and all that. But what goes down, eventually goes up again.
It really comes down to wanting the stability of a paid house in the weird times we are in vs building wealth with extra money that you put into the home. Our advisor supports whatever we do, but instead of paying off the house (which was what we wanted initially), we are compromising with his advice and going 50/50.
Posted on 7/17/21 at 5:41 pm to rphtx
Mortgage acts as a nice inflation hedge. Otherwise it’s just the math vs peace of mind that gets discussed on the MTB each week.
Posted on 7/17/21 at 6:11 pm to Turf Taint
I plan to have the home paid off for peace of mind.
Part of the equation is interest rates. Lower interest rates make sense not to pay off early assuming you’d invest the difference.
I personally hope we get back to more normal interest rate environment but we’re addicted to cheap money.
Part of the equation is interest rates. Lower interest rates make sense not to pay off early assuming you’d invest the difference.
I personally hope we get back to more normal interest rate environment but we’re addicted to cheap money.
Posted on 7/17/21 at 9:24 pm to rphtx
love all the downvotes. fyall
Posted on 7/17/21 at 11:26 pm to rphtx
Congrats on retiring at 52
Posted on 7/18/21 at 3:42 am to Turf Taint
My plan is to retire in about 16 years. We will probably have a mortgage. However, we may downsize shortly thereafter so probably will end up with no mortgage for that purchase. Really depends on housing market. Hell, our house is already up 25% in value from October and that doesn’t take into account the renovations we did.
This post was edited on 7/18/21 at 3:44 am
Posted on 7/18/21 at 6:33 am to MSTiger33
quote:
house is already up 25% in value from October
Housing appreciation can vary over long periods of time.
I’m fully funding 403b, 457, a d a SEP for my sole proprietorship. We invest in stock market in a brokerage account as well.
Each month I pay extra toward mortgage. I could pay it off in total, but I’m content with having it paid off when I retire from the job job in about 4 years.
I will likely continue the sole proprietorship because I’m only 61. It is not as stressful as the main job, and the income is good.
Posted on 7/18/21 at 8:31 am to makersmark1
I’m retired and debt free. May not be the smartest move but for me not owing anyone anything is quite a liberating feeling. I don’t expect to make all the right financial moves but being stress free has a value to me as well. Being debt free has kept me from tapping into my investments so far. Retired at 57.
Page 1 of 3
Popular
Back to top
Follow TigerDroppings for LSU Football News