Mortgage Question

**disneysteve** · 07-03-2013, 09:09 AM

Originally posted by LivingAlmostLarge View Post

most of my parents friends and in-laws have downsized and moved. Is this not what happens?

Do they all have mortgages?

I also know a lot of people who have downsized and moved. They sold their paid for homes, used some of the equity to buy the new smaller home, and used the rest of the equity to pad their retirement savings. I also know people who made a pretty even swap to the new property. I can't say I know many people who bought more expensive homes in retirement with a new mortgage to support on a reduced income.

**MonkeyMama** · 07-03-2013, 09:23 AM

On some level, I don't think it matters. The point is, it's not wise to have a mortgage in retirement. The whole benefit of home ownership, to me, is being rent and mortgage-free for the bulk of my life. That is the plan. Having a mortgage defeats most of that purpose. If you have a plan to be rid of the mortgage, sounds like the same difference to me.

I don't know anyone who has downsized. I don't think it is a very common thing in our culture. This maybe goes a lot with many in our family never particularly buying up in house.

I think to me there is also a bit of a risk factor. There is no guarantee what home values will do and if you can sell your home and if it will still make sense to downsize in another 20-30 years. SO, I personally plan to be done with my mortgage well before I retire. I would like to be done age 45-50, but am not going to be crazy gung ho on that because we probably will downsize by then. But in case of the worst case scenario, I am still not going to put myself in a position where I may have a mortgage in another 30 years (age 65+). Yes, we are definitely conservative. The real estate and stock markets have been totally crazy insane the whole time I have been adult. In current conditions, we could do very well downsizing, and that is our plan. But, we will have to re-evaluate that in another 15 years or so. Who knows... Right now in the city that we live in, it's lower cost, so condos are "beneath" most people, and dirt cheap. So, I am hoping this will still be true in 15 years time. But not counting on it...

**Like2Plan** · 07-03-2013, 09:58 PM

Originally posted by LivingAlmostLarge View Post

What is the problem with having a mortgage when you retire? What if the plan is to downsize and move to a smaller house or move somewhere cheaper? Does it matter if the home is paid off? I ask because what if you want to move from a house to a condo or retirement community? And the only thing that matters is the equity built up? I can say that because living where I live even 50% of an expensive home is more than many people's homes.

But honestly most of my parents friends and in-laws have downsized and moved. Is this not what happens?

I can't see a problem with having a mortgage when you retire if you have accounted for it with your expenses (or you have a plan to downsize).
My personal choice was to pay off our mortgage. My goal was to reduce expenses so that we could continue to live in our same neighborhood (in a relatively high cost of living area) after retirement. I know others who didn't really care to stay in this area--part of their retirement plan was to move to a lower cost of living area so they could more easily afford their expenses. But as you point out, either plan will work.

**LivingAlmostLarge** · 07-07-2013, 02:44 PM

Some do and some don't. I pointed out to my mom that and she thinks the same way a paid for house only. I pointed out it doesn't matter if it's a loan with $300k in the bank or $300k paid for home. Same difference splitting hairs.

**Jerry91** · 07-08-2013, 12:29 AM

If you own a home which is paid off, you won't have to bear the burden of paying off monthly mortgage payments at that point of life when you don't have a stable, regular income. You will be able to live a peaceful life.

**JoeP** · 07-08-2013, 05:16 AM

Originally posted by Jerry91 View Post

If you own a home which is paid off, you won't have to bear the burden of paying off monthly mortgage payments at that point of life when you don't have a stable, regular income. You will be able to live a peaceful life.

THIS. Why would you want a recurring debt payment when you are on a fixed income?

**LivingAlmostLarge** · 07-08-2013, 06:51 AM

No I think people are misunderstanding, why do you need to pay off your home by retirement? What if the plan is to sell the house and just move to somewhere smaller where you won't have a mortgage? Instead of that 3 or 4 bedroom SFH you want a 2 bd condo?

Mortgage Question