I’m too old to own a home

[Allan from Fallbrook]

[quote=Oxford]Dude. Thinking is good. Overthinking is not so good. Just buy a house. There are great deals now and rates are low. Or wait until Fall like most of us.

Sure there is plenty to debate regarding renting or purchasing a home. That’s another topic.

You said you really want to purchase a home. Do it. I made a ton of money selling my LCV home purchased in 2000. Great tax write offs. Landscaped how I liked it and not have to deal with a landlord.

I am 56 and plan to buy a home in Escondido-Bonsall-Vista with land and views. Getting a 15-year loan and plan to hammer it down in half that time. Then live in it forever.

It’s all about deciding what you really want and doing it. Keep asking questions and checking your heart for what you and your family want. Write out the pros and cons.

There is no answer that is best for everyone.

Good luck

OX
…life coach[/quote]

OX: You hit the nail on the head: “Over analysis leads to paralysis”. Or, as the Army used to put it in their inimitable fashion: “A bad decision is better than no decision”.

Ultimately, your house purchase should simply be the place you want to live and you should enjoy living there. Yes, do your homework by all means, but you can wind up parsing the numbers in an unending search for the “perfect” scenario. Hint: It doesn’t exist.

We bought a 3,350sf custom built on 1.2ac in Fallbrook in 2003 for $425k. My reasoning was that we were paying about $105sf for the house and the balance on the land, and I didn’t see the value falling below that number, even in really bad times. Was I right? I don’t know. I hope I was, but time will tell. The point is, you have to make your best guess and then pull the trigger. I’ll tell you this: I love this place and I love the community. My family is happy and that counts for far more than getting the math right.

[carlsbadworker]

Ultimately, if you remove the emotional factors in owning a house (typical more pronouncedly displayed by most female species), it is just an investment return issue. So if you are responsible with your money and you can find some magical 20% fixed return on your investment, then by all means invest your money and use your proceeds to rent, you don’t want to tie any of your money into the house unless you can use it as an ATM machine to get more cash out for your investment.

But if you are stuck with the investment choices that most of us have, then you should make the buy v.s. rent trade and it is just pure mathesmatics. Note that since the real useful life of a house is generally much greater than 30 years (even the government allows 39 years for depreciation purpose). When buying (factor in 30 years mortgage) is less than renting on a monthly basis, it is no doubt a steal. Many people on this board are waiting because they want to a bigger steal, not that they consider homeownership a bad trade for long-term.

I think the other concept you hung up on is the pre-payment concept. You think “a 15 year loan is generally a ripoff”, because “you don’t get the full value of having your loan balance get obliterated by inflation”. I argue that this is not the case. Whether or not to pay off the loan (despite all the emotional factors and risk management factors) really depends on the rate of the return of your other investment. If you are like most savers on this board, every month, you run a surplus cashflow and you have to do something with it. Paying off mortgage early (e.g. via 15 year loan) gives you a fixed return (although that is currently only around 5%). But ignoring tax benefits which is applicable on case by case scenario, it is still above the last century’s average inflation rate. So I would think that paying off mortgage is kind of like a bond, and as of today, the 30-year treasury is 4.2% only. So your money earns a better return with the mortgage than the government bonds.

So a rational choice of whether you should pay off the mortgage early or not, really depends on your risk appetite and your age. Having a 15-years loan makes perfect sense for your age, giving its bond-like feature. But that also depends on your other financial picture, for example, I wouldn’t want to put any extra money towards mortgage until I have the following:

1) Medical insurance (from employment now).
2) Emergency fund with 6 months of expenses.
3) Long term disability insurance (from employment now)
4) Term life insurance
5) 401K contribution up to the employer’s match.
6) Max out a ROTH IRA.

Your case may vary.

[carlsbadworker]

Ultimately, if you remove the emotional factors in owning a house (typical more pronouncedly displayed by most female species), it is just an investment return issue. So if you are responsible with your money and you can find some magical 20% fixed return on your investment, then by all means invest your money and use your proceeds to rent, you don’t want to tie any of your money into the house unless you can use it as an ATM machine to get more cash out for your investment.

But if you are stuck with the investment choices that most of us have, then you should make the buy v.s. rent trade and it is just pure mathesmatics. Note that since the real useful life of a house is generally much greater than 30 years (even the government allows 39 years for depreciation purpose). When buying (factor in 30 years mortgage) is less than renting on a monthly basis, it is no doubt a steal. Many people on this board are waiting because they want to a bigger steal, not that they consider homeownership a bad trade for long-term.

I think the other concept you hung up on is the pre-payment concept. You think “a 15 year loan is generally a ripoff”, because “you don’t get the full value of having your loan balance get obliterated by inflation”. I argue that this is not the case. Whether or not to pay off the loan (despite all the emotional factors and risk management factors) really depends on the rate of the return of your other investment. If you are like most savers on this board, every month, you run a surplus cashflow and you have to do something with it. Paying off mortgage early (e.g. via 15 year loan) gives you a fixed return (although that is currently only around 5%). But ignoring tax benefits which is applicable on case by case scenario, it is still above the last century’s average inflation rate. So I would think that paying off mortgage is kind of like a bond, and as of today, the 30-year treasury is 4.2% only. So your money earns a better return with the mortgage than the government bonds.

So a rational choice of whether you should pay off the mortgage early or not, really depends on your risk appetite and your age. Having a 15-years loan makes perfect sense for your age, giving its bond-like feature. But that also depends on your other financial picture, for example, I wouldn’t want to put any extra money towards mortgage until I have the following:

1) Medical insurance (from employment now).
2) Emergency fund with 6 months of expenses.
3) Long term disability insurance (from employment now)
4) Term life insurance
5) 401K contribution up to the employer’s match.
6) Max out a ROTH IRA.

Your case may vary.

[carlsbadworker]

Ultimately, if you remove the emotional factors in owning a house (typical more pronouncedly displayed by most female species), it is just an investment return issue. So if you are responsible with your money and you can find some magical 20% fixed return on your investment, then by all means invest your money and use your proceeds to rent, you don’t want to tie any of your money into the house unless you can use it as an ATM machine to get more cash out for your investment.

But if you are stuck with the investment choices that most of us have, then you should make the buy v.s. rent trade and it is just pure mathesmatics. Note that since the real useful life of a house is generally much greater than 30 years (even the government allows 39 years for depreciation purpose). When buying (factor in 30 years mortgage) is less than renting on a monthly basis, it is no doubt a steal. Many people on this board are waiting because they want to a bigger steal, not that they consider homeownership a bad trade for long-term.

I think the other concept you hung up on is the pre-payment concept. You think “a 15 year loan is generally a ripoff”, because “you don’t get the full value of having your loan balance get obliterated by inflation”. I argue that this is not the case. Whether or not to pay off the loan (despite all the emotional factors and risk management factors) really depends on the rate of the return of your other investment. If you are like most savers on this board, every month, you run a surplus cashflow and you have to do something with it. Paying off mortgage early (e.g. via 15 year loan) gives you a fixed return (although that is currently only around 5%). But ignoring tax benefits which is applicable on case by case scenario, it is still above the last century’s average inflation rate. So I would think that paying off mortgage is kind of like a bond, and as of today, the 30-year treasury is 4.2% only. So your money earns a better return with the mortgage than the government bonds.

So a rational choice of whether you should pay off the mortgage early or not, really depends on your risk appetite and your age. Having a 15-years loan makes perfect sense for your age, giving its bond-like feature. But that also depends on your other financial picture, for example, I wouldn’t want to put any extra money towards mortgage until I have the following:

1) Medical insurance (from employment now).
2) Emergency fund with 6 months of expenses.
3) Long term disability insurance (from employment now)
4) Term life insurance
5) 401K contribution up to the employer’s match.
6) Max out a ROTH IRA.

Your case may vary.

[carlsbadworker]

Ultimately, if you remove the emotional factors in owning a house (typical more pronouncedly displayed by most female species), it is just an investment return issue. So if you are responsible with your money and you can find some magical 20% fixed return on your investment, then by all means invest your money and use your proceeds to rent, you don’t want to tie any of your money into the house unless you can use it as an ATM machine to get more cash out for your investment.

But if you are stuck with the investment choices that most of us have, then you should make the buy v.s. rent trade and it is just pure mathesmatics. Note that since the real useful life of a house is generally much greater than 30 years (even the government allows 39 years for depreciation purpose). When buying (factor in 30 years mortgage) is less than renting on a monthly basis, it is no doubt a steal. Many people on this board are waiting because they want to a bigger steal, not that they consider homeownership a bad trade for long-term.

I think the other concept you hung up on is the pre-payment concept. You think “a 15 year loan is generally a ripoff”, because “you don’t get the full value of having your loan balance get obliterated by inflation”. I argue that this is not the case. Whether or not to pay off the loan (despite all the emotional factors and risk management factors) really depends on the rate of the return of your other investment. If you are like most savers on this board, every month, you run a surplus cashflow and you have to do something with it. Paying off mortgage early (e.g. via 15 year loan) gives you a fixed return (although that is currently only around 5%). But ignoring tax benefits which is applicable on case by case scenario, it is still above the last century’s average inflation rate. So I would think that paying off mortgage is kind of like a bond, and as of today, the 30-year treasury is 4.2% only. So your money earns a better return with the mortgage than the government bonds.

So a rational choice of whether you should pay off the mortgage early or not, really depends on your risk appetite and your age. Having a 15-years loan makes perfect sense for your age, giving its bond-like feature. But that also depends on your other financial picture, for example, I wouldn’t want to put any extra money towards mortgage until I have the following:

1) Medical insurance (from employment now).
2) Emergency fund with 6 months of expenses.
3) Long term disability insurance (from employment now)
4) Term life insurance
5) 401K contribution up to the employer’s match.
6) Max out a ROTH IRA.

Your case may vary.

[carlsbadworker]

Ultimately, if you remove the emotional factors in owning a house (typical more pronouncedly displayed by most female species), it is just an investment return issue. So if you are responsible with your money and you can find some magical 20% fixed return on your investment, then by all means invest your money and use your proceeds to rent, you don’t want to tie any of your money into the house unless you can use it as an ATM machine to get more cash out for your investment.

But if you are stuck with the investment choices that most of us have, then you should make the buy v.s. rent trade and it is just pure mathesmatics. Note that since the real useful life of a house is generally much greater than 30 years (even the government allows 39 years for depreciation purpose). When buying (factor in 30 years mortgage) is less than renting on a monthly basis, it is no doubt a steal. Many people on this board are waiting because they want to a bigger steal, not that they consider homeownership a bad trade for long-term.

I think the other concept you hung up on is the pre-payment concept. You think “a 15 year loan is generally a ripoff”, because “you don’t get the full value of having your loan balance get obliterated by inflation”. I argue that this is not the case. Whether or not to pay off the loan (despite all the emotional factors and risk management factors) really depends on the rate of the return of your other investment. If you are like most savers on this board, every month, you run a surplus cashflow and you have to do something with it. Paying off mortgage early (e.g. via 15 year loan) gives you a fixed return (although that is currently only around 5%). But ignoring tax benefits which is applicable on case by case scenario, it is still above the last century’s average inflation rate. So I would think that paying off mortgage is kind of like a bond, and as of today, the 30-year treasury is 4.2% only. So your money earns a better return with the mortgage than the government bonds.

So a rational choice of whether you should pay off the mortgage early or not, really depends on your risk appetite and your age. Having a 15-years loan makes perfect sense for your age, giving its bond-like feature. But that also depends on your other financial picture, for example, I wouldn’t want to put any extra money towards mortgage until I have the following:

1) Medical insurance (from employment now).
2) Emergency fund with 6 months of expenses.
3) Long term disability insurance (from employment now)
4) Term life insurance
5) 401K contribution up to the employer’s match.
6) Max out a ROTH IRA.

Your case may vary.

[UCGal]

As someone working on their late 40’s also, I see the world opposite than you.

My grandparents NEVER owned. They always had very nice townhouse style apartments back east. When they retired to San Diego they rented in a very nice part of north PB. It was great. Until the complex they’d lived in for 18 years condo-converted. My grandmother was forced to move under circumstances not of her choosing. It was a serious blow to her, emotionally. She ended up having to move 2 more times, in her 70’s.

That’s not how I want to spend my 70’s… I have a 15 year loan and only have 9 years left on it. My financial planning for retirement and for my kids college mandates that I get my biggest bill – the mortgage – paid off. (My kids are young despite my age – retirement and college will be concurrent expenses.)

I also like my house and don’t plan on moving. Soon it will be paid for. How sweet is that!

But I’m in the minority on this board, I think. I don’t look at my house as an investment that I expect to see a return on. Because I plan to live in it till I go to the old age home or die. What do I care if it is worth more or less. It’s a roof over my head that serves my needs well. It’s shelter.

[UCGal]

As someone working on their late 40’s also, I see the world opposite than you.

My grandparents NEVER owned. They always had very nice townhouse style apartments back east. When they retired to San Diego they rented in a very nice part of north PB. It was great. Until the complex they’d lived in for 18 years condo-converted. My grandmother was forced to move under circumstances not of her choosing. It was a serious blow to her, emotionally. She ended up having to move 2 more times, in her 70’s.

That’s not how I want to spend my 70’s… I have a 15 year loan and only have 9 years left on it. My financial planning for retirement and for my kids college mandates that I get my biggest bill – the mortgage – paid off. (My kids are young despite my age – retirement and college will be concurrent expenses.)

I also like my house and don’t plan on moving. Soon it will be paid for. How sweet is that!

But I’m in the minority on this board, I think. I don’t look at my house as an investment that I expect to see a return on. Because I plan to live in it till I go to the old age home or die. What do I care if it is worth more or less. It’s a roof over my head that serves my needs well. It’s shelter.

[UCGal]

As someone working on their late 40’s also, I see the world opposite than you.

My grandparents NEVER owned. They always had very nice townhouse style apartments back east. When they retired to San Diego they rented in a very nice part of north PB. It was great. Until the complex they’d lived in for 18 years condo-converted. My grandmother was forced to move under circumstances not of her choosing. It was a serious blow to her, emotionally. She ended up having to move 2 more times, in her 70’s.

That’s not how I want to spend my 70’s… I have a 15 year loan and only have 9 years left on it. My financial planning for retirement and for my kids college mandates that I get my biggest bill – the mortgage – paid off. (My kids are young despite my age – retirement and college will be concurrent expenses.)

I also like my house and don’t plan on moving. Soon it will be paid for. How sweet is that!

But I’m in the minority on this board, I think. I don’t look at my house as an investment that I expect to see a return on. Because I plan to live in it till I go to the old age home or die. What do I care if it is worth more or less. It’s a roof over my head that serves my needs well. It’s shelter.

[UCGal]

As someone working on their late 40’s also, I see the world opposite than you.

My grandparents NEVER owned. They always had very nice townhouse style apartments back east. When they retired to San Diego they rented in a very nice part of north PB. It was great. Until the complex they’d lived in for 18 years condo-converted. My grandmother was forced to move under circumstances not of her choosing. It was a serious blow to her, emotionally. She ended up having to move 2 more times, in her 70’s.

That’s not how I want to spend my 70’s… I have a 15 year loan and only have 9 years left on it. My financial planning for retirement and for my kids college mandates that I get my biggest bill – the mortgage – paid off. (My kids are young despite my age – retirement and college will be concurrent expenses.)

I also like my house and don’t plan on moving. Soon it will be paid for. How sweet is that!

But I’m in the minority on this board, I think. I don’t look at my house as an investment that I expect to see a return on. Because I plan to live in it till I go to the old age home or die. What do I care if it is worth more or less. It’s a roof over my head that serves my needs well. It’s shelter.

[UCGal]

As someone working on their late 40’s also, I see the world opposite than you.

My grandparents NEVER owned. They always had very nice townhouse style apartments back east. When they retired to San Diego they rented in a very nice part of north PB. It was great. Until the complex they’d lived in for 18 years condo-converted. My grandmother was forced to move under circumstances not of her choosing. It was a serious blow to her, emotionally. She ended up having to move 2 more times, in her 70’s.

That’s not how I want to spend my 70’s… I have a 15 year loan and only have 9 years left on it. My financial planning for retirement and for my kids college mandates that I get my biggest bill – the mortgage – paid off. (My kids are young despite my age – retirement and college will be concurrent expenses.)

I also like my house and don’t plan on moving. Soon it will be paid for. How sweet is that!

But I’m in the minority on this board, I think. I don’t look at my house as an investment that I expect to see a return on. Because I plan to live in it till I go to the old age home or die. What do I care if it is worth more or less. It’s a roof over my head that serves my needs well. It’s shelter.

[snail]

I used to be an owner, but now just a low life renter. I do really want to buy again but on the other hand don’t really want the hassle of selling if the job requires to. I also think when it is time to retire, I will be staying not in a house but on a senior apartment. So, why worry about buying a house anyway (I only going to buy if it get to $75/sqft in Morgan Hill, where is BEARVINE?). I will just spend my money on a HOG, what do anyone suggest a Roadking or a FatBoy?(sorry for hi-jack)

[snail]

I used to be an owner, but now just a low life renter. I do really want to buy again but on the other hand don’t really want the hassle of selling if the job requires to. I also think when it is time to retire, I will be staying not in a house but on a senior apartment. So, why worry about buying a house anyway (I only going to buy if it get to $75/sqft in Morgan Hill, where is BEARVINE?). I will just spend my money on a HOG, what do anyone suggest a Roadking or a FatBoy?(sorry for hi-jack)

[snail]

I used to be an owner, but now just a low life renter. I do really want to buy again but on the other hand don’t really want the hassle of selling if the job requires to. I also think when it is time to retire, I will be staying not in a house but on a senior apartment. So, why worry about buying a house anyway (I only going to buy if it get to $75/sqft in Morgan Hill, where is BEARVINE?). I will just spend my money on a HOG, what do anyone suggest a Roadking or a FatBoy?(sorry for hi-jack)

[snail]

I used to be an owner, but now just a low life renter. I do really want to buy again but on the other hand don’t really want the hassle of selling if the job requires to. I also think when it is time to retire, I will be staying not in a house but on a senior apartment. So, why worry about buying a house anyway (I only going to buy if it get to $75/sqft in Morgan Hill, where is BEARVINE?). I will just spend my money on a HOG, what do anyone suggest a Roadking or a FatBoy?(sorry for hi-jack)

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