Buying past "prime" home buying years

[Anonymous]

We are in our mid-40s and would like to buy a new home to get in a better school pyramid and have more space. We got started late with kids and have one in ES and one preschool. I have always thought it would be best to have our mortgage paid off by retirement. In the price range we are looking we feel a 30 year mortgage would be more affordable but it wouldn't be paid until we are in our mid-70s, at which point we hope not to be working. Should we:

1. Buy a house where the payment is affordable on a 15 year loan that will be paid by retirement?
2. Buy on a 30 year loan and reassess whether we want to stay there as we get older? We thought we could always downsize when kids move out and we don't need the space, but I'm not sure how realistic it is that kids in their 20s will be out of the house.

[Anonymous]

We bought a house at initially 2x HHI on a 15-year and paid it off in 3. Affordable houses make life much, much easier.

[Anonymous]

Lots of people buy their first house in their 40's and around here kids that age in your forties is not unusual. Buy it as if you were any first time home buyer. You never know what will happen - downsizing, etc. It's great if you can pay off the house before you retire, but not necessary. You can always pay it off early too if you get some extra money. Now obviously don't buy more house than you can afford, but I would also say this to anyone in their twenties or thirties.

[Anonymous]

Most people in this area don't pay off their houses unless they bought before the 80s. They just sell and move to a cheaper area for retirement.

[Anonymous]

Anonymous wrote:Most people in this area don't pay off their houses unless they bought before the 80s. They just sell and move to a cheaper area for retirement.

Not true. I'm a millennial with a 15 year mortgage, which I will pay off in my late 40s.

I personally wouldn't take on a mortgage I wouldn't have paid off until my 70s. I saw my parents' friends do this and it made a huge difference financially for them. I'd instead invest the money and stay in your current home or find a home you can afford on a 15 year mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Most people in this area don't pay off their houses unless they bought before the 80s. They just sell and move to a cheaper area for retirement.

Not true. I'm a millennial with a 15 year mortgage, which I will pay off in my late 40s.

I personally wouldn't take on a mortgage I wouldn't have paid off until my 70s. I saw my parents' friends do this and it made a huge difference financially for them. I'd instead invest the money and stay in your current home or find a home you can afford on a 15 year mortgage.

PP said "most people" and I think he/she is right. We could pay off the remaining balance on our 15-year mortgage now, but choose not to.

[Anonymous]

The safe choice would be to take the 30 year mortgage and pay extra each month as if it is a 15 year fixed. There will be months when you need the extra money for other purposes so you won't be tied to the higher monthly payment.

[Anonymous]

I took option 2 as a single parent. My mortgage goes until I'm 73. But I also don't plan to be here forever (townhouse, lots of stairs but in a very prime location), am a Fed with a pension, and I also hope to refinance down to a 20 or 15 year loan when the numbers are right) .

Do what makes sense for you.

[Anonymous]

Anonymous wrote:Most people in this area don't pay off their houses unless they bought before the 80s. They just sell and move to a cheaper area for retirement.

You realize that was 37 years ago, right?

[Anonymous]

It depends a lot on your goals and if you have family wealth or other assets. My husband is convinced it makes sense to never pay off a mortgage - much better to do a HELOC if needed or refinance and take cash out than to end up retired with too much $$$ in your house and faced with a reverse mortgage, which are rip-offs.

[Anonymous]

I wouldn't advise paying off a home unless you plan to live in it at least 10 years paying it off.

[Anonymous]

We did option 1. We couldn't afford to buy a house until we were done paying 2,000 to 2,400 dollars a month for daycare. We bought a house when our youngest entered kindergarten in a great school pyramid and for the extra space. We won't finish paying off mortgage until we are 74. We built up retirement savings and have pensions so we will be fine paying mortgage in retirement. We are considering making extra payments to pay it off in 20 years but we like having extra savings in cash for the security.

[Anonymous]

Anonymous wrote:Most people in this area don't pay off their houses unless they bought before the 80s. They just sell and move to a cheaper area for retirement.

Or someone like me. I have zero desire to pay off my house. Interest rate is 3.5%. For the last 10 years I've been making modest 8.5% average return on my investments. I don't put a single penny extra towards my mortgage. It makes zero sense to do so.

[Anonymous]

Anonymous wrote:The safe choice would be to take the 30 year mortgage and pay extra each month as if it is a 15 year fixed. There will be months when you need the extra money for other purposes so you won't be tied to the higher monthly payment.

Took the words right out of my mouth.

[Anonymous]

Anonymous wrote:The safe choice would be to take the 30 year mortgage and pay extra each month as if it is a 15 year fixed. There will be months when you need the extra money for other purposes so you won't be tied to the higher monthly payment.

This. We do something similar. However we allocate money at the end of the year. We live on the basics each month and dump all extra in cash savings. On Dec 15th we then allocate what is left between the 529, roth, market investments, what we want to keep on cash and the remainder goes to the mortgage. Sometimes we have 25k at the end of the year, sometimes we have 75k.