Author Topic: How Much House Can They Afford?  (Read 2781 times)

cincystache

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How Much House Can They Afford?
« on: April 29, 2019, 06:01:23 PM »




EDIT: The house still has a small mortgage balance of 30k and the house is worth ~310. They told me the equity(between 270 and 280) and I assumed it was paid off... my apologies


Retired couple, 69 yrs. old
Assets: 825k in trad IRAs, 30k cash, 270k 310k house
Debt:None 30k mortgage @3.1% 1,300 per month PITI payment
Expenses: 5,000 per month on average
Income: 3,000 per month in social security, increasing to 5,000 per month starting in late 2020 (survivor benefits will be 3,200)

The plan is to sell their current home and move to a ranch lakehouse nearby.

How much house can they afford? I'm suggesting 500k would be easy to manage given their life stage, expenses, and net worth. What say you? They are in disagreement on how much they can afford.
 
« Last Edit: May 01, 2019, 07:32:35 PM by cincystache »

Cassie

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Re: How Much House Can They Afford?
« Reply #1 on: April 29, 2019, 06:08:44 PM »
Do they have long term care insurance?  What do houses cost there and how big are they?  Medical expenses get to be major as you age.

ixtap

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Re: How Much House Can They Afford?
« Reply #2 on: April 29, 2019, 06:20:22 PM »
How long are those "average" expenses averaged over? Do they include any big ticket items, like replacing a roof or a car?

cincystache

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Re: How Much House Can They Afford?
« Reply #3 on: April 29, 2019, 06:22:56 PM »
Do they have long term care insurance?  What do houses cost there and how big are they?  Medical expenses get to be major as you age.

No LTC insurance, Houses on the lake are a very wide range from a 2bd1ba cabin up to mansions anywhere from 200k up to 2 million+ is out there.

Both in pretty good health now, how would you plan for healthcare in their situation?

cincystache

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Re: How Much House Can They Afford?
« Reply #4 on: April 29, 2019, 06:24:38 PM »
How long are those "average" expenses averaged over? Do they include any big ticket items, like replacing a roof or a car?

The last four years they have been retired. It doesn't include any cars or roofs, just a few household appliances.

MonkeyJenga

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Re: How Much House Can They Afford?
« Reply #5 on: April 29, 2019, 06:29:24 PM »
It's one retired couple? Do they need more than a 2 bedroom cabin?

cincystache

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Re: How Much House Can They Afford?
« Reply #6 on: April 29, 2019, 06:33:24 PM »
It's one retired couple? Do they need more than a 2 bedroom cabin?

Need? No. Want? Yes, for grandkids, kids, friends, etc. They would probably get a 3bd/2ba

Anyone have an opinion on a reasonable budget for the home? Not looking to do a full case study, just wondering how much you'd be comfortable tying up in a personal residence in their situation.

MrUpwardlyMobile

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Re: How Much House Can They Afford?
« Reply #7 on: April 29, 2019, 06:35:59 PM »
I mean, it seems like maybe they just need a small house with 2-3 rooms for flex purposes if they have a lot of family over.  Thatís a two bedroom house with a good sized den.

Cassie

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Re: How Much House Can They Afford?
« Reply #8 on: April 29, 2019, 07:04:40 PM »
I wouldnít spend more than 350.  Itís estimated that the normal couple spends 250k each on health expenses from 65-deaths.  We are 65 and you can be healthy one day and the next not so much.

Zamboni

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Re: How Much House Can They Afford?
« Reply #9 on: April 29, 2019, 07:14:29 PM »
In their shoes, I would try very hard to get a house that meets our needs for the $270K already have invested in housing. Spending more than necessary is just silly.

Can they afford more? Probably. I've always thought the "how much house can I afford" whole conversation is silly. Decide what you really need and buy that if you can afford it. If not, rent. MMM has a nice blog post about that (Toronto market from what I recall) as does Jim Collins. They don't have that big of a nest egg to be spending $500K on a house in my opinion.
« Last Edit: April 29, 2019, 07:59:31 PM by Zamboni »

Cassie

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Re: How Much House Can They Afford?
« Reply #10 on: April 29, 2019, 07:19:44 PM »
We much prefer to own as itís very important to me too have the house the way you want it. Plus moving gets old when you are old:))

Zamboni

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Re: How Much House Can They Afford?
« Reply #11 on: April 29, 2019, 08:00:49 PM »
^True. Moving sucks at any age. But so does cleaning a bigger house than you need.

cincystache

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Re: How Much House Can They Afford?
« Reply #12 on: April 29, 2019, 08:11:05 PM »
Thanks for the responses.

@Zamboni renting isn't of interest for them, they want a place to settle and spend the remainder of their healthy lives. Also, "buy what you need" is way too subjective. I could take it to the extreme and say you should live in a van and eat beans and rice for every meal because that is all you technically "need". Actually, make that a car, no, a tent, no, a bivy sack, no, a tarp draped over a tree branch. I'm only kidding, thanks for the response.

@Cassie I appreciate the response, I've seen 250k in health costs per couple after age 65, I hadn't heard about 250k each. It's so hard to plan for things around averages of huge populations. It's like trying to predict if it will rain on August 3rd of next year by giving you the average annual rainfall...

I'm still thinking 500k is sensible given that starting next year 100% of their day to day living expenses are covered by SS income alone. This would leave 500k in the house and ~600k to compound until it is needed for healthcare or other unexpected expenses. I think most of us in the community are either not counting on SS income or don't expect enough of it to cover 100% of retirement expenses which is why I wanted to ask this question and see what you all thought.

ixtap

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Re: How Much House Can They Afford?
« Reply #13 on: April 29, 2019, 08:16:55 PM »
Thanks for the responses.

@Zamboni renting isn't of interest for them, they want a place to settle and spend the remainder of their healthy lives. Also, "buy what you need" is way too subjective. I could take it to the extreme and say you should live in a van and eat beans and rice for every meal because that is all you technically "need". Actually, make that a car, no, a tent, no, a bivy sack, no, a tarp draped over a tree branch. I'm only kidding, thanks for the response.

@Cassie I appreciate the response, I've seen 250k in health costs per couple after age 65, I hadn't heard about 250k each. It's so hard to plan for things around averages of huge populations. It's like trying to predict if it will rain on August 3rd of next year by giving you the average annual rainfall...

I'm still thinking 500k is sensible given that starting next year 100% of their day to day living expenses are covered by SS income alone. This would leave 500k in the house and ~600k to compound until it is needed for healthcare or other unexpected expenses. I think most of us in the community are either not counting on SS income or don't expect enough of it to cover 100% of retirement expenses which is why I wanted to ask this question and see what you all thought.

Except that SS doesn't cover expenses if one of them passes. And the more expensive house will likely require more expensive maintenance and taxes, so unless they have other ways of cutting, SS will likely not cover their expenses now.

cincystache

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Re: How Much House Can They Afford?
« Reply #14 on: April 29, 2019, 09:02:51 PM »

Except that SS doesn't cover expenses if one of them passes. And the more expensive house will likely require more expensive maintenance and taxes, so unless they have other ways of cutting, SS will likely not cover their expenses now.

That's a good point. I guess if one of them passes I assume the other would sell the house and downsize if need be.

MonkeyJenga

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Re: How Much House Can They Afford?
« Reply #15 on: April 29, 2019, 09:22:39 PM »
You said the couple disagree. What range of size and cost are they each arguing for?

One

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Re: How Much House Can They Afford?
« Reply #16 on: April 29, 2019, 10:48:41 PM »
$350,000

mistymoney

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Re: How Much House Can They Afford?
« Reply #17 on: April 30, 2019, 03:56:09 AM »
How is their money invested?

100% stocks?

alsoknownasDean

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Re: How Much House Can They Afford?
« Reply #18 on: April 30, 2019, 05:00:21 AM »
$5000 a month seems like a lot in expenses for a retired couple with no mortgage.

Fishindude

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Re: How Much House Can They Afford?
« Reply #19 on: April 30, 2019, 06:53:41 AM »
I think a $500,000 home is a bit excessive for a couple with a net worth just a little over $1.1 mil.
I wouldn't tap the savings more than $50-100k for changing houses, so $370k max.

Laura33

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Re: How Much House Can They Afford?
« Reply #20 on: April 30, 2019, 07:54:02 AM »
I think $500K is too high for where they are.  Personally, I would assume only one SS, because they are unfortunately reaching the age where they will very likely have one SS for longer than they have two.  And you absolutely don't want to add to the survivor's burden by putting them in a position where they are struggling to make ends meet and have to make quick decisions at the most difficult time of their life.*

So basic math:  if you have about $1.1M to deploy, and you take $500K for a house, then in theory you'd have $600K left, which would provide about $24K/yr, which hits their needs, right?  Except you're missing a few things:

1.  Most significantly, if they have to withdraw $250K from a traditional IRA all at once, they are going to have a massive tax bill that year.  And that means that they are going to have to withdraw much more than $250K to give them the money they need for the house.  And that means their numbers now fall short.

2.  They won't get $270K for the old house -- they will have to pay commissions and fix-ups and moving fees, etc.

3.  A more expensive new house will come with more expensive taxes and electric/gas bills and maintenance, too.  And as they get older, they will have to outsource more of that maintenance, which again will increase their costs more.

4.  Medical care and other contingencies, like everyone above has said.  As you get older, IMO, you need a bucket of cash that you don't need to draw on for your daily living expenses to cover the surprises.**  Because at that point in your life, you don't have the same ability to go back to work to cover any shortfall.

In sum, I would strongly suggest keeping the lake house to whatever they can net from the house sale.  They can probably go over that by a little bit, but they need to consider the tax implications of withdrawing a big chunk from their IRAs to do so.

*Real example:  my stepdad died the month after he put in his SS paperwork, before the first check even arrived.  My mother is the most competent person I have ever met, and she needed so. much. help. just to manage basic things that would never have even made her bat an eye before -- for months and months and months.  And she had breakdowns about money worries to boot, even though there is basically no possible world in which she runs out of money.  You cannot understand how deeply something like this hits the survivor until you see it up close and personal, which is why IMO "she can just downsize" is not even a remotely acceptable plan.

**Like, say, a parent's $10K/mo. cancer drugs being denied coverage by Medicare -- you really want to be able to do what my FIL did and just say "fuck it" and buy the drugs now and deal with the paperwork and appeals after treatment has started.

horsepoor

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Re: How Much House Can They Afford?
« Reply #21 on: April 30, 2019, 08:13:48 AM »
Everything @Laura33 said, because she is wicked wise.  Also, if they get a bigger, fancier house, I suspect that they'll want to spend more decorating, getting new furniture, etc.  Something similar or smaller/more humble than their current home would be cheaper to furnish, and more likely to just be furnished with their current stuff. An then there's the likelihood of buying lake toys, boats, jet skis, etc.  If their average expenses were lower, I wouldn't have this suspicion, but like someone else pointed out, $5K per month when not servicing any debt points to some spendy habits.

Cassie

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Re: How Much House Can They Afford?
« Reply #22 on: April 30, 2019, 11:20:54 AM »
Actually 5k is not that much if they are traveling, eating out, going to events, etc.   6 years ago when we retired we ramped up the traveling and fun stuff because we had the time and energy. Plus having 3 friends die in their 60ís shows you that life can be short. I think having a spouse die effects people differently. When my dad died at 73 my mom had no problem handling everything.

Laura33

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Re: How Much House Can They Afford?
« Reply #23 on: April 30, 2019, 11:35:09 AM »
I think having a spouse die effects people differently. When my dad died at 73 my mom had no problem handling everything.

Oh, I agree.  The problem is that you don't know which category your parents will fall into before it happens (I'd sure have picked the opposite end of the scale).

Cassie

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Re: How Much House Can They Afford?
« Reply #24 on: April 30, 2019, 11:58:08 AM »
Laura, my dad didnít die suddenly. He was sick for a long 14 years. It was miserable. Now if your dad died suddenly I could see the shock.

frugaliknowit

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Re: How Much House Can They Afford?
« Reply #25 on: April 30, 2019, 12:40:28 PM »
The correct answer is:  Not enough information.

However, my $.02 with the given information ("back of the envelope"):

$825K * .04*.88 (assuming 12% taxes and no state income tax) = $2420 per month income from current stache.

How much can we reduce the stache to pay for house is the question?

Plus  $5,000/month SS (depending on how much it's taxed...could be zero, depending on "provisional income"...IRA/401K withdrawls are provisional income as are dividends and some other stuff...?)

This might equal (depending on taxes):  $7420 at current residence without upgrading for cash.

A moving part not discussed:  What are the expense changes on the new house (taxes, maintenance, utilities).  Generally, more square feet, more desirable area = more $$$$.  Going from $270 to $500K, could easily double their housing expenses, even with no mortgage.


Too many moving parts and not enough information, my friend:)


horsepoor

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Re: How Much House Can They Afford?
« Reply #26 on: April 30, 2019, 12:51:00 PM »
Actually 5k is not that much if they are traveling, eating out, going to events, etc.   6 years ago when we retired we ramped up the traveling and fun stuff because we had the time and energy. Plus having 3 friends die in their 60ís shows you that life can be short. I think having a spouse die effects people differently. When my dad died at 73 my mom had no problem handling everything.

Yes, those are spendy habits. ;)  Not judging, just saying they're likely to pour more money above the home purchase into their new "lake lifestyle."

Cassie

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Re: How Much House Can They Afford?
« Reply #27 on: April 30, 2019, 02:44:18 PM »
It really depends if some of that money is spent on travel because at that age you arenít tent camping.  Also you realize both your health and life left are limited.  As others have mentioned is there lifestyle going to inflate like new furniture, etc.  We just move our furniture when we move but not everyone does that.

Zamboni

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Re: How Much House Can They Afford?
« Reply #28 on: April 30, 2019, 06:36:48 PM »
$500K on a home (which is likely more than $250K from their liquid stash which will end up being more than 1/3 of all their money) is not prudent if they can find a suitable home for them for half that amount. Sure you can always say "wouldn't it be nice to have this better view?" And that's great if you have a huge excess. I argue that they do not have a huge excess. They have their life savings at this point . . . and that's it. No one wants to face the fact that they might need that cash for assisted living or in-home health care help, for example, but they very well might need it.

I would not agree that living in a van would meet an elderly couple's housing needs, so that's a straw man argument on your part.

They should do their best to work with the money that they have available from their existing home sale since they are no longer working and probably do not have a real possibility of returning to work at their previous salaries at this age. Encouraging them to spend more is irresponsible.

You need to ask yourself:
Why do I want them to spend more?
Is it because I really think they will be happier?
Is it because I think I will enjoy visiting their home more?
Is it because I think I might inherit this house some day, so I want them to get the house that I want instead of what they really need and should prudently buy?

Only you can answer these questions.

lhamo

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Re: How Much House Can They Afford?
« Reply #29 on: April 30, 2019, 07:43:06 PM »
I would also be very hesitant to spend twice as much as they need for their own use just to provide a place for family to crash. They would be much better off shelling out for a nearby seasonal rental for the kids/grandkids than sinking half of their stash into a large property they don't really need/will struggle to keep up.

$5k/month spending for two people on Medicare seems really high, especially for their relatively small stash.  We're spending around that with two teens still at home and a travel budget in the 10-20k range (mandatory transpacific flights for family reasons).

SwordGuy

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Re: How Much House Can They Afford?
« Reply #30 on: April 30, 2019, 09:39:04 PM »
Here's the deal:

Current social security is based on two people receiving it.  They are 69 years old.  Statistically, one of them will die and the other may well live quite sometime after that.   When one of them dies their social security will drop to one income stream, that of the largest of the two current income streams.

When deciding on how much house to buy, the decision should be based on that LOWER social security income, not the current income.

So, that's $3200 a month, is that correct?   That's 38,400 a year.   4% of $825,000 = $33,000 a year.   


Sustainable income is $71,400.   I don't think anyone should get a mortgage at more than twice their annual income, so we're talking a home for $142,800 based on their income.   

They are currently spending $60,000.

Does that include a mortgage payment?  Or is the current house paid off?   If the house is currently paid off, that means they only have, on average, $11,400 to spend on principle, interest, and the difference between their current and new taxes and insurance.  Otherwise they are drawing down their stash too high.   If the house is not currently paid off, then that $11,400 is available for a more expensive house than they currently have.

We don't know how much equity they have on the house.  Equity from the sale of the current house could be used to reduce the size of a mortgage.   If they can afford a $142,800 house with zero equity, and they have $100,000 in equity, they could use that to enable them to afford a $242,800 house.  There's enough slippage in my calculations to allow for a small delay in selling the old house and additional costs to refinance the house to a lower mortgage amount after applying the equity.   If the loan allowed recasting, they wouldn't have to refinance to reduce the mortgage expense after the equity was applied.

No way would I get a $350,000 mortgage with their income unless I had every reasonable expectation of being able to reduce it BIG TIME after a fairly prompt sale of my current home.








calimom

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Re: How Much House Can They Afford?
« Reply #31 on: April 30, 2019, 09:53:34 PM »

Except that SS doesn't cover expenses if one of them passes. And the more expensive house will likely require more expensive maintenance and taxes, so unless they have other ways of cutting, SS will likely not cover their expenses now.

That's a good point. I guess if one of them passes I assume the other would sell the house and downsize if need be.

Uh, at 69 there's no real question about 'if' one of them dies. Statistically, one will die at some point in the not-so-distant future.

OP, are you one of the kids who will benefit by a lake house with multiple bedrooms/bathrooms for fun weekends? If so, I see your point in wanting as big a house as possible.

frugaldrummer

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Re: How Much House Can They Afford?
« Reply #32 on: April 30, 2019, 10:08:42 PM »
I would not buy with the assumption of downsizing if one partner dies. There could be lots of factors making that impractical at any particular moment.

If they stay in their current house and one partner dies next year, the survivor has $3200 a month and can draw an additional [$825000 x .04 ] divided by 12 = 2750 per month. This covers the SS shortfall plus an extra $750. Now granted, one person lives a little more cheaply than two but probably not 1800 a month cheaper, so let's say expenses go down from $5k per month to 4K per month at most. That leaves 1750 per month to cover all additional housing expenses without the surviving partner having to take a cut in lifestyle. Depending on increases in property taxes and home insurance, that might cover payments on a $150-200k mortgage (on top of the probable 240 k from sale of their house after fix it costs and realtor fees).

As mentioned before, this doesn't include funds to fix up and furnish the new place. I'd probably limit the new home purchase price to $400k which is about $160 mortgage after applying proceeds from sale of their home.

Now - some other considerations:
What's the weather like? Will it be comfortable living there in winter?

How much seasonal maintenance is there? My ex father-in-law had a summer place on a lake in upstate New York. It was a huge job to get it ready for summer and to close it up for winter. It also required a lot of maintenance.

How far would they be from good health care?

What kind of community lives there in the winter? Will they be stranded amidst empty vacation homes with no friends or community in the winter? Will they be leaving behind good friends in their current community?

How reasonable is the expectation that kids and grandkids will want to travel there every year? (My ex and I lived in CA and only spent a week there every other year because of expense of traveling across country with a family of five and desires to travel elsewhere.

What if, instead, they used the extra $2,000 in SS that they'll be getting next year to arrange an annual one month house rental on the lake? They could probably rent the same place every year, and I doubt it would cost as much as $24,000.
 

As discusssd
« Last Edit: April 30, 2019, 10:11:00 PM by frugaldrummer »

Cassie

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Re: How Much House Can They Afford?
« Reply #33 on: April 30, 2019, 10:13:53 PM »
Wow Ilamo, unless once you get to where you are going you have a free place to stay.

frugaliknowit

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Re: How Much House Can They Afford?
« Reply #34 on: May 01, 2019, 03:43:31 AM »
They should probably try living for 6 months or so on projected lower 401K balances, survivor benefit SS, with new, higher housing expenses before doing anything.  Put the difference in a separate account, then come to a conclusion.


cincystache

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Re: How Much House Can They Afford?
« Reply #35 on: May 01, 2019, 07:25:50 PM »
All,

Wow, thanks for all of the input. Lots of good points to consider. I appreciate it.

These aren't my parents, it's my aunt and uncle but we are pretty open in our family with finances. I'm not going to inherit anything but yes we'll visit once or twice a year and they have two adult children with grandkids that live within 20 minutes of this area that visit multiple times per week.

I got some more info and they actually have a mortgage payment of 1,300 per month still on their current house but only 30,000 left on the mortgage. The house is worth 310k. Their actual expenses are 3,700 per month not including the mortgage, taxes, insurance.

I'm sorry for the confusion. I'll edit the original post to clarify. Knowing they are only spending 3700 per month in "lifestyle" spending makes me feel a little better about their ability to handle a more expensive house but I think something in the 400-425 range would probably be more suitable based on the feedback if they can find something suitable.

In terms of financing, they would take out a 15 year fixed mortgage and only put 20% down using some of the equity in their current house. Then they would take the rest of the equity and invest it in index funds. They would draw only enough from their 401k to fill up the 12% tax bracket or satisfy the RMD (whichever is greater). This keeps taxes low and avoids needing to take out 200k+ in one year to buy a house with cash. I think that is a good idea with mortgage rates where they are.


Zamboni

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Re: How Much House Can They Afford?
« Reply #36 on: May 01, 2019, 08:04:25 PM »
So they don't want to rent (understandable). But, instead you suggest that they put only 20% down on a more expensive home and get a 15 year mortgage at age 69? That's . . . interesting.

Are you making some of the common mistakes cited about seniors shopping for their "dream retirement homes":
1. Assuming they will be able to drive forever
2. Underestimating home related expenses
3. Planning based upon income now rather than legacy planning
4. Forgetting that interest is front loaded on mortgages

Based upon what I've read, it doesn't seem like you should be offering any financial advice at all to your aunt and uncle.

Cassie

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Re: How Much House Can They Afford?
« Reply #37 on: May 01, 2019, 09:34:43 PM »
I would put the house money as a down payment and take a 30 year mortgage.

Laura33

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Re: How Much House Can They Afford?
« Reply #38 on: May 02, 2019, 08:49:39 AM »
OK, $3700 is better than $5K.  But two more notes:

1.  They should absolutely take a 30-year mortgage, not a 15-year one.  The difference in interest rates between the two is not that big, and 30-year rates are still near their historic lows.  They could still prepay the mortgage on a 15-year schedule if they want while they are flush (i.e., while they have two SS checks), but the survivor would also have the critical financial flexibility to drop back to the normal payments if the mortgage isn't fully paid off when that second SS goes away.

2.  Psychologically, they should start looking by focusing on the lower-$300K range.  That is because for many people, when they start looking at the top end of their budget, fall in love with houses that are even more expensive once they see what that extra $25K or whatever gets them.  Ever watched House Hunters?  "I have a strict $250K budget" usually becomes "but we can make $300K work" when they fall in love with a fancy place.  So if their "real" max is a hard cap at $400K (I'd advise less, of course), then they should initially target a hard cap of $350K so they still have room if they find their "dream home/forever home/[insert whatever emotional tug causes people to make stupid financial decisions]" -- without blowing their long-term plans.

LadyMuMu

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Re: How Much House Can They Afford?
« Reply #39 on: May 02, 2019, 11:25:23 AM »
When was the last time the lake flooded its banks? How far is the house from medical care? Is senior transportation available in that community. Could they live there comfortably after they no longer drive (~10 years or so)?

My in-laws blew through about 35% of their retirement nest egg by buying a house that was too big, too far, too fancy of a neighborhood. That's 35% towards new drapes, new furniture, repairs, lawn care, etc. When FIL died, it was only by the skin of her teeth that MIL was able to move into a small condo that she could afford with access to transportation/health care. She uses about 1/3 of the space she has now.

One of the reasons they bought so big first was that they assumed we would come and stay with them for the summer?!?!?! I think we spent a total of 15 nights there during their time in that house. Crazy.

Zamboni

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Re: How Much House Can They Afford?
« Reply #40 on: May 02, 2019, 11:55:46 AM »
Having delivered meals-on-wheels many times, it is shocking to me how much better off the elderly folks seem who are in retirement apartments/condos/cottages instead of single family homes in normal neighborhoods. Besides having less to clean, they have a built in daily community of people with similar hours.

As a result, I'm going to start retirement community shopping if I make it to my 70's (or earlier if I start having mobility or memory problems) and get myself moved there while I'm still functional so my family doesn't have to worry about taking care of me. My Dad's parents did this . . . so much better situation than my Mom's parents who tried to stay in their giant house.

cincystache

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Re: How Much House Can They Afford?
« Reply #41 on: May 03, 2019, 07:34:17 PM »
Thanks Cassie and Laura33. I hadn't considered the 30 year mortgage but your points are well taken.


cincystache

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Re: How Much House Can They Afford?
« Reply #42 on: May 03, 2019, 07:35:29 PM »
So they don't want to rent (understandable). But, instead you suggest that they put only 20% down on a more expensive home and get a 15 year mortgage at age 69? That's . . . interesting.

Are you making some of the common mistakes cited about seniors shopping for their "dream retirement homes":
1. Assuming they will be able to drive forever
2. Underestimating home related expenses
3. Planning based upon income now rather than legacy planning
4. Forgetting that interest is front loaded on mortgages

Based upon what I've read, it doesn't seem like you should be offering any financial advice at all to your aunt and uncle.

Thanks Zamboni...