Author Topic: Any Widows Separating Emotion From Reality?  (Read 589 times)

Betty Chug

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Any Widows Separating Emotion From Reality?
« on: September 01, 2017, 07:28:11 AM »
Mortgage Case Study

Market Value: $230k
Original Purchase price: $159k
Original Mortgage Amount: $132k
Interest Rate: 4.3
Mortgage Term:  30 year
Term remaining: 27 years (I refinanced to a longer term when my husband got sick)
Amount remaining on mortgage: 117k
Gross Rents: N/A
Principal and Interest (the P&I of your PITI - should match with the above info): 649
Taxes and Insurance (the T&I of your PITI): $400
HOA costs: 0
Deferred maintenance notes:  none


Help me think clearly.  Iím a 41 year old widow with two small children, 6 and 4.  Iíve held off paying the remainder of my mortgage for the two years since my husband died due to conflicting ideas about keeping it liquid in case I made another life choice--Iíd been thinking I could keep this house and rent it for $1700-$1800/month and create a new space for myself and my family.

However, now Iím 2 Ĺ years of sitting on this decision.  Housing inventory is low/expensive in my area, and it would put me in a much bigger, more expensive mortgage to move.  To move, another suitable property would currently cost $300-$350k.


All common sense tells me to pay my current mortgage and start paying myself my mortgage payment back.  Since I currently overpay $750/m, Iíd pay myself $9000 a year, plus save the interest payment, $445/month or $5336 year.  I do not currently work and live on survivorís benefits from my husbandís social security, about $40k yearly.  The mortgage interest deduction is not very necessary to me at this time.

My husband and I remodeled our modest ranch house: itís efficient, tight, works, and is in a good neighborhood and school system.


But emotion is getting in my way: the resignation that ďis this all there is?Ē  Should I just pay off this mortgage?  Or accept that the emotions here are messy and itís okay to move on?  Am I just overthinking and should I pay off this mortgage and sell when I find a place to move onto?

Has anyone found themselves in a similar spot?  Advice?

Cwadda

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Re: Any Widows Separating Emotion From Reality?
« Reply #1 on: September 01, 2017, 07:38:42 AM »
First: I'm very sorry for your loss, it must be very difficult what you're going through.

I'm having difficulty interpreting all your questions. Can you narrow it down to just one question?

On these forums you will come across folks with two sides of the argument. Either pay the mortgage down early, or do not + invest the difference. From what it seems, the house itself is a good fit for you and the kids, and suits your needs. So it wouldn't be necessary to sell it and buy another place/rent. Selling would be extra added stress, too.

You're sitting on a 4.3% interest rate. That's pretty darn good. I tend to fall on the side of NOT paying your mortgage early, because once you pay that money in, you can't get it back (you can, but it's not quick and easy). Given your circumstances: I'd make minimum payments and see where your cash per month falls. That extra $750/month makes a big difference. If you're living comfortably, you can always decide to make extra payments later.

Side note: I'd recommend grief counseling, or counseling of any sort. It's the best investment in happiness I've made.

lizzzi

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Re: Any Widows Separating Emotion From Reality?
« Reply #2 on: September 01, 2017, 07:54:19 AM »
First of all, what is it you want to do? Do you want to stay in your current house (which sounds like a pretty good fit all the way around), or are you thinking of pulling up stakes and moving? It doesn't seem clear to me, unless I'm missing something.

Part B of this discussion is, of course, the old "Pay off the mortgage and save and invest the difference, or continue paying the mortgage, and keep the money invested." controversy. People get very passionate about both options, as a couple of threads on this forum have demonstrated.

I am just coming up on three years of widowhood, and it is a time not just of dealing with bereavement, but figuring out who you really are and want you really want...when you no longer are working things through together as a couple...when it is just you. It is quite a task, and I'd recommend exploring this carefully and mindfully, so when you do make a decision, it is the right one for you. (And P.S.--what is best for you is not necessarily what well-meaning friends and family think is best for you.) It's kind of a dual task--handling the net worth wisely while following your heart.


Betty Chug

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Re: Any Widows Separating Emotion From Reality?
« Reply #3 on: September 01, 2017, 08:26:53 AM »


I am just coming up on three years of widowhood, and it is a time not just of dealing with bereavement, but figuring out who you really are and want you really want...when you no longer are working things through together as a couple...when it is just you. It is quite a task, and I'd recommend exploring this carefully and mindfully, so when you do make a decision, it is the right one for you. (And P.S.--what is best for you is not necessarily what well-meaning friends and family think is best for you.) It's kind of a dual task--handling the net worth wisely while following your heart.
[/quote]

Thanks.  I think this is the real crux of the question.  Although money is involved.  I need to pick through these parts of bereavement.  I, too, am sorry for your loss. 

Also, I have a terrific grief counselor, who helps greatly!


SwordGuy

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Re: Any Widows Separating Emotion From Reality?
« Reply #4 on: September 01, 2017, 08:42:54 AM »
So, you have a stash of cash someplace and you're thinking of just paying off the mortgage right away?
Did I understand you correctly?

How much cash/stock/bonds would you have left after you did that? 
Will you be going back to work after both kids are in school?   
What kind of income do you expect to make?
Does the survivor benefit "run out" at some time in the future, like when the kids start turning 18?

Let's take some numbers and see what happens.

Relevant facts are a 7% average historical market growth rate after taking out inflation and a 10% rate including inflation. 

$130,000 invested at that 7% rate would end up about $800,000 in 27 years in today's dollars when your mortgage is paid off.  It would be about $1,700,000 in actual dollars at the time.

Since you're currently paying extra on the mortgage (which I'm assuming is coming out of the $40,000 income and not your stash), you're not hurting in the cash flow department.

With the info you've given so far, I would not pay it off.   But, depending on the answers to the questions above, I might advise differently.

But that's just the money talking.

I can also understand that you just might prefer to be in a different house.  In that case, perhaps you should consider moving somewhere they have good schools but the cost of living is less.  This is especially easy since you're not working, though if you're planning to work again you'll need to make sure that some job would be available where you end up.


Dee18

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Re: Any Widows Separating Emotion From Reality?
« Reply #5 on: September 01, 2017, 09:10:14 AM »
It sounds like your issue really is figuring out where you want to live and what kind of home you want.  I'm a single parent by adoption and I've said many times that I found single parenting easier than single home ownership (of a historic, i.e. very old, craftsman bungalow). Thus, I sold my home this year, with my daughter now in college.  You might make a list of reasons you want to continue your current situation and reasons you want to move.  It sounds like you have the financial situation to make that choice based on non-financial reasons. That is perfectly okay.  For me, keeping a home as a landlord would be misery, but for others it just feels like opportunity.  The hardest thing about selling my home was being told I was making a mistake by friends.  I had to just keep reminding myself that they were validating their own choices in criticizing mine.  (Also, none of them fully know my financial situation.)