New mortgage at 45?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This place is full of financial fools.

Meaning what exactly since I'm assuming YOU are not one of us financial fools?

Meaning until a year or two ago interest rates were 2%. It's free money.

But the rates are not 2% now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This place is full of financial fools.

Meaning what exactly since I'm assuming YOU are not one of us financial fools?

Meaning until a year or two ago interest rates were 2%. It's free money.

But the rates are not 2% now.

Then don't remortgage.

[Anonymous]

Sure because if I can get a low enough rate, I can make more elsewhere. I’m 48 and plan to retire in the next 5 years or so, but could also pay cash for a house if need be.

[Anonymous]

I wouldn't but it really depends on your theory of retirement. I wanted my house paid off before I retired.

[Anonymous]

I don't see why not. If you haven't paid off the house when you are ready to retire, you can either keep paying the mortgage with your retirement income, pay it all off at once if you have sufficient funds, or sell the house and downsize to something cheaper that you can pay off more readily (or with lower payments).

The keys to buying a house at any age are (1) can you afford the payments comfortably, (2) and will the house hold its value in the short term or increase its value in the medium/long term.

[Anonymous]

Anonymous wrote:I did but I did a 15 year. That almost doubles the payments, so it’s tight.

The big benefit of doing a 15 year is that you're paying down the same mortgage but at a good bit less than double the payment. You get better rates on a 15 year mortgage but even if we assume it's the exact same rate this is what we get:

30 Year: $500,000 balance @ 7% = $3,326.51
15 Year: $500,000 balance @ 7% = $4,494.14

That's only a 35% increase in your payment. And in the real world you'll get a cheaper rate on the 15 year so the gap will be smaller.

Cutting the mortgage from a 30 year to a 15 year means your payment will approach doubling as your rate approaches 0% but of course the closer your rate gets to 0% the longer you'd want your mortgage to be (if I could get a 0% mortgage sign me up for a 50 year term). The higher the interest rate environment the smaller the percentage increase between payments gets.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Would you take out a new mortgage at the ripe old age of 45? Truth be told, none of us knows when our working days will be over - we could face age discrimination or ill health. Would you take the risk to buy a new home at that age or is it over for me? Income and down payment are available.

No way. But we have college to pay for. So, if you have kids: no. If you don't have kids: maybe.

We just took out a new mortgage in our mid-40s but we've also been saving for college for the past 10 years, and will continue to do so. Why haven't you been saving for college??

[Anonymous]

Yes, but we arguably overfunded retirement accounts, we have a lot of money committed to private investments that will most likely allow us to just payoff the mortgage in lump sums over the next 10 years, and 529 plans are fully funded. We had kids late, so we still need a family-size house for a while, but can always downsize when our youngest is the last one left at home.

[Anonymous]

of course, I'm 55, have an income property and will be buying something in the next couple years, I'll just pay it off before I retire at 65.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes, but I would factor in my age and expected age of retirement because they will impact your finances.

The thing is, lots of people take out 30 year mortgages in their 30s. So the difference between that and taking out a 15 year mortgage in your 40s is negligible. But I'd want to be putting more money down in my 40s, which shouldn't be a problem because you should have both more savings and more income in your 40s so putting together a large down payment should be a lot easier in your 40s.

Ideally if I take out a mortgage in my 40s (which I very well may as we intend to move in the next few years and the proceeds from our current home are not going to be enough to pay cash for the home I want), I want to be putting down a very sizable down payment (like maybe even 50% or more if I can swing it) and I want my monthly payment to be pretty low.

Also, by your 40s you should be starting to be able to identify your expected age of retirement and also have some idea of what your your finances will be. For us, we're on target to retire by 62 and would currently have about 10k/month in income (if we needed it). So taking out a 15 year mortgage at 49 with a payment of 2k/mo doesn't seem like a big deal to me -- I'd be done paying it at 64 but it wouldn't delay retirement because our retirement income would more than cover it without things being tight at all.

There is no such thing as a $2000 mortgage where I live, unfortunately. There’s nothing under $8-9000 per month that’s livable (somewhat livable ranch house in a decent neighborhood). That’s what concerns me.

This is absolutely ridiculous. I live in NYC and there are plenty of extremely livable places for mortgages far less than $8-9k, unless you have like a dozen children and need an absurd number of bedrooms.

[Anonymous]

I would but I would do a 30-year so the payment was low(er) but pay it like a 15-year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This place is full of financial fools.

Meaning what exactly since I'm assuming YOU are not one of us financial fools?

Meaning until a year or two ago interest rates were 2%. It's free money.

Lol, no, it's not free money. Even if you locked in a 3% mortgage and inflation averages 3% for the next 28 years, that just means your real, effective interest rate is 0%.

But you still owe every penny of the $800K principal you borrowed, and this must be paid back according to a rigid schedule whether or not you're sick, have lost your job, etc. And if you can't make those payments, the bank can take your house. Not my definition of free money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This place is full of financial fools.

Meaning what exactly since I'm assuming YOU are not one of us financial fools?

Meaning until a year or two ago interest rates were 2%. It's free money.

Lol, no, it's not free money. Even if you locked in a 3% mortgage and inflation averages 3% for the next 28 years, that just means your real, effective interest rate is 0%.

But you still owe every penny of the $800K principal you borrowed, and this must be paid back according to a rigid schedule whether or not you're sick, have lost your job, etc. And if you can't make those payments, the bank can take your house. Not my definition of free money.

Plus, if you borrowed $800K, you still owe that $800K even if home prices drop (as they inevitably will at some point when interest rates rise). So your house drops by $200K and then you lose $200K when you sell. These "mortgages are magical!" posters are so stupid.

[Anonymous]

DH is military and we've taken out 12 since marrying. What's another?

[Anonymous]

You have to ask yourself what if any impact the new mortgage will have on your retirement plans. If your goal is to have no mortgage at retirement a 30 year mortgage is not going to work. So you have to be able to afford a 15 year. That may or may not be possible. DH and I are mid-40s. We would like to move and upgrade. Even though we have a large amount of equity and could put 50-60% down on a new more more expensive house the dramatic difference in interest rates between our current mortgage and a new mortgage makes it really tough.