Hi folks,
The wife and I agree that we are going to have to move eventually. Our current house is a bit larger than we need, and it will be even more excessive once our soon-to-be college graduate son gets out on his own. Also, the house and property are not conducive to long-term aging (stairs, hilly yard to take care of, wood heat). However, we love our location and property and don't want to move just yet. Also, we are pretty sure our son will be returning home after college for a save-up period prior to striking out on his own (not sure for how long).
I'm planning on FIRE or some version of semi-retirement in about 4 years (maybe longer, depending on how well we save and invest). Here are the financial particulars on the house:
--currently owe about 98k, financed at 3 1/8 %
--I'm guessing market value at about 150k, but it's been a long time since we've had it appraised
--a little less than 13 years left on the loan
--monthly P+I = 779
--monthly insurance = 77
--monthly taxes = 70 (yes, that's right - property taxes here are insanely low, and the schools are appropriately shitty ;) )
--we have enough stashed to pay off the house if we wanted to, but at 3 1/8% it doesn't seem like the right thing to do
Here's the basic question: should we do the downsize move prior to FIRE? Again, we really are not ready to do it right now, but 4+ years isn't that far away. Here are the considerations that we are weighing:
--Despite our reluctance to pay off a loan at 3 1/8%, we are a little spooked by the thought of having a mortgage payment for the first 9 years of FIRE. If we downsize, we likely would shorten the term by a few years, or perhaps eliminate the mortgage entirely depending on how much equity we have in the current house at the time. During this 9-yr period, we will be living mostly off of the stash, though DW's modest SS benefit ($850/mo) begins in year 3.
--If we wait until after FIRE, are we going to be able to get a mortgage with little or no earned income? This is probably the thing that unnerves me the most. If we can't get a loan, I see four choices:
1) buy a house that doesn't cost any more than the equity we have in our current house at the time (and even this option may require a bridge loan while our current house is on the market)
2) dip into the stash to pay cash for the house
3) wait until we've paid off the current house (again, this may require a bridge loan or a temporary dip into the stash while the current house sells). My wife will be 72 by then, hopefully still able to function in our current house, but one never knows.
4) un-RE or delay RE long enough to get a loan.
What would you do in our situation? Thanks in advance for your replies.
