Hypothetical new house considerations

[Melman]

I've lived in my house for 17 years. Nice yard...nice house for me. Nice neighbors. I live alone. For all those years raising my son as a single mom, I've done ALL the work at the house...inside, outside, hired out stuff I couldn't do. For nearly all the years, I was also taking classes and finishing a bachelors degree. But I managed.

Son graduates from college next year. The yard still looks good, but I've decided that after all those years of doing literally everything, maybe I'm getting tired and want to relax a bit. I'm possibly considering looking for a condo or patio home. Major reasons for moving - no yard work (ahhh...when I think of the time I could spend in a sunroom or screen-in porch reading instead of working in the yard), a GARAGE (this is a big deal...my neighbor's tree drops stuff on my car about 24 months of the year or at least it seems like it), and brand new everything. :D Yes, I know about the regime fees and realize this is a part of the money matters.

Negatives - I'll have my house paid off in about 13 years. Mine. All mine. Then there's no tax write-off. And the yard will always need work and the tree will will always drop stuff on my car.

The timeframe is supposed to be next year as my son moves out on his own (he's nearly out now). I just found out about a gorgeous new complex that's somewhere in the price range. I'm going to have to go up in price to get into a nice area (another one of the reasons I'm considering this move is watching the nearby neighborhoods sort of go into a very slow decline). I'm looking at a brand new 30 year loan that could potentially be less tham I'm paying now...but with the impossibility that I'll ever have it paid off.

Is paying off a house a big deal? Is keeping the tax write-off a better plan? For all you people who have just moved or are considering a move, what kind of decisions have you had to make? By the way, this is a brand new idea....I never considered moving until I took a long 4 mile walk around the nearby neighborhoods a few weeks ago. I really don't like what I'm seeing. It's still fine right now, but it's not going to improve...things will only run down a bit more each year.

I have to admit, this is the most exciting idea I've considered in a long time :D So many questions...and so many neighborhoods to investigate.

[greysangel]

the only exciting thing about paying off the house for Chaz and I (if we decide to stay instead of selling for profit and moving to the boonies!) is that without kids, we could easily retire early and have the bank do that whole reverse mortgage where they are buying the house back :D :D Instant income :)

[wallycat]

I'm no financial wiz, but paying off a mortgage or not should be based on a few things--two of which are:

1. Tax bracket you will be in to see if the interest really affords you a decent write-off.

2. peace-of-mind/security you need in knowing you don't "owe" for anything.

[linsleyd]

I've always heard it's better to have a mortgage because you get the tax write off and technically (so I read) you should invest that money.
DH and I hopefully putting an offer on a house tonight and we'll have the thirty year loan, it's our third home so I really could care less about paying off a loan. This most definetly won't be our last home.

I think there is no reason you shouldn't move for all the reasons you stated. It sounds as if you could use the relaxation a condo could give you. Trust me, if it wasn't for Dh I would probably get a townhome so we didn't have to worry about all of the fix-ups, etc.

[PurplePotato]

If your neighborhood is starting to decline, you want a no maintenance lifestyle, and you can afford it I say go for it!

[ChristieinMB]

I've moved many times, my DH and I real home junkies. I know we will never pay off our mortgage.
BUT that holds no value to me. I know we can afford the mortgage, do better with investng the money, have the tax write off, so for us mortgages are great. I do believe if you are hesitant about the future of your neighborhood, now is the time to move. What good is no mortgage if you are not happy with your lifestyle. I say go for it. Maybe you can get a low rate 15 years mortgage. A brand new home sounds fun, but as I said I'm a home junkie.
Christie

[mbrogier]

Don't forget that since you're close to paying off your mortgage that you have that money that you could use as a down payment for your new home, provided that you sell your house for the same price you bought it for or more. I would definitely get out of a declining neighborhood.

I think you should move while your son is still around to help you. :p Once he's out of school and gets a job, he might not have the free time.

[Lauren]

I don't mean to sabotage your thread, but we have a hole! We signed a P&S in the fall for a new home and finally they're beginning.

I feel the same way as you, do we really need to be doubling our mortgage? DS#1 is in 8th grade, so for us, the college thing is looming. Don't forget that you're moving all your equity from this house to the new one. Yes, you won't have the mortgage paid off so soon, but the new house will appreciate and ultimately be worth more. JMHO. ;)

[Kay Henderson]

Melmen--

This has your juices going -- a positive sign!

Some thoughts:

1. In the markets I am familiar with, condos appreciate less than single family homes. If you are not dependent upon this appreciation as part of your financial planning for the future, this is less of an issue.

2. How does your son feel?

3. It might be useful to talk to one or more real estate persons knowledgeable about your market, the neighborhoods, etc.

4. If you have considerable equity in your house, you may be able to secure a fifteen year loan for the difference in buying a new place -- perhaps less than that.

5. It is always clarifying to play the "IF YOU HAD YOUR DRUTHERS" game. Where would you live if you had a choice? How can you make it happen?

Good luck to you!

Kay

[donleyk]

If you don't 100% enjoy the yard work then I would look for a way around it. It can be a real drag doing it while working 40 hours at your real job. :D Which I am sure you're aware of.

I think condo life is a good compromise. You can have containers on the back patio and still get to tinker with gardening if you like. Paying a small fee to not have to mow and shovel (if that is a consideration) sounds okay to me.

Plus, there is talk about *all* of our deductions :rolleyes: On the chopping block is home interest deductions. I wouldn't let that stop me from paying cash for a condo from the proceeds of selling my home.

Good luck, whatever you decide.

[Melman]

It's interesting how nearly everyone has focused on a different point-of-view! I knew you'd come up with ideas that had never entered my mind. THANKS!!!! This is probably something I'm going to be considering seriously over the next year or so just to determine what's doing to be right thing for me to do.

JeAnne - I don't know about this "reverse mortgage where they are buying the house back" option. Can you give me more details? Is this on any loan or only certain types of loans.

wallycat - That's one of the issues that keeps running through my head...I could own my house in such a short amount of time. Of course, I should also add that I've refinanced about every 5 years or so usually because of interest rates dropping. I've taken the opportunity to roll my home equity line into the new loan each time. My home equity paid for my college, any major renovations in my home...like new windows, etc. I'm looking at a couple of major purchases for the house right now....hmmm...if I move, I won't have to make these changes. (Hmmm...that's definitely a bonus point for me!)

linsleyd - You said the magic word - relaxation. (That's a bonus point in the condo category)

ChristyMarie - The neighborhoods are in a fast decline...I think it just jumped out at me because I haven't walked through the neighborhoods probably since last fall. It is definitely a concern to me though!! My neighborhood is just older. With all the new neighborhoods popping up everywhere, I'm also afraid that I'll reach a peak in how much my house would be worth.

ChristieinMB - You hit another totally different thought. Like I said, I've lived in this house 17 years. I lived in the house before that for about 6 years. This is such a foreign thought to me --> moving!! Yikes! I also admit it's a very definite way to do some major elimination of stuff that's been in my attic for 17 years! :D

mbrogier - Terrific idea about moving while the son is around. :D At this point, he's actually considering staying in the area (I never thought I'd hear that from him!!!) I also checked the houses for sale in my neighborhood. It looks like they've increased in the last few years! I was amazed at some of the prices...and my house is nicer than the ones for sale with a much larger yard. I know that scenario of not counting your chickens before they're hatched, but I could get a good bit more out of my house than I originally thought.

Lauren - Congratulations on the work beginning on your new home!!! The area where I'm considering (actually not terribly far from where I am now) is growing SOOOOOO quickly, I'm guessing there should be some considerable appreciation for whenever I might move the next time.

Kay Henderson - Great questions!! Thanks!!! My son is actually in the process of looking for an apartment to live in for his last year at college. When I tossed out the idea that I might consider a condo or patio home, I don't think he thought I was serious. It was a couple of days later that he had this incredulous look on his face of "you're serious???" He's be fine with it though. My family almost did cheers when I mentioned it! My dad immediately blurted out that not having yardwork is the smartest thing I could do. My parents just moved to a new house about 4 years ago after being in their old one for 35+ years. Another yard. Much prettier though.

donleyk - The yard work is such an issue with me. My yard is really one of the prettiest in the neighborhood. I have a friend who's a landscaper...he aerates my lawn and puts out grass seed each fall. It's gorgeous!! The beds are nicely shaped because of him too. I LOVE the perennials that are coming up everywhere...I do love this time of year! BUT...it's the stuff that HAS to be done...weeds, mulch, various pests (oh, how I hate Japanese beetles!!), leaves, sweetgum balls all over the place...it's constant. I really like container gardening. I've been doing that more and more over the past few years. If I make this move, one of the considerations will be to try finding a place with sun shining in the right directions!!

Thanks again for all the suggestions and comments!! :D

[greysangel]

http://www.aarp.org/money/revmort/revmort_federal/Articles/a2003-03-21-elig.html

The above is a pretty decent article. I'm not an expert but basically it's a loan against the value of the house. I first heard about it from a blurb in O magazine in the S. Ormont section. I don't know a ton about it (mostly because I'm 33 and we may end up selling), but it's worth exploring further.

Here's the blurb from the May issue "house rules":
*************************
The interest you pay on your mortgage is tax deductible. If you are in the 28 percent tax bracket, every dollar you pay in interest is reduced to just 72 cents after the tax break.

When you sell your home, the first 250,000 of your gain is absolutely tax free. If you're married and file a joint return, the gift is 500,000. You can use this break for any primary residence you have owned an dlived in for at least two of the past five years. Any gain above these limits is taxed at the superlow capital gains rate, which is just 15 percent for most people.

When heirs take possession of the house, the IRS will allow them to claim as their acquisition cost the value of the home on the day you die. That can help to greatly reduce their tax bill when they decide to sell.

If you manage to get your mortgage paidd off before you retire, you'll eliminate your single biggest monthly living expense.

If you need more income when you retire, a reverse mortgage - a loan against your home that you don't have to pay back until you die, sell your property, or permanently move - can generate that money while you still get to stay in your house.

*******************

So for us, this is a definite possibility. We will have no heirs so when we go, as I understand it, the loan would be paid off by the balance of the value of the house when the bank goes to resell.

[sharris315]

Since you have lived in your house for 17 years, you'll probably be pleasantly surprised how much it's appreciated in value. We're ready to do the same thing as you--and have been amazed at what realtors are telling us about the value of our home of 10 years--we knew it had gone up, but not this much! So you may have much more to reinvest than you think.

If you think your neighborhood is going to move in the wrong direction, this is all the more reason to sell now. This is a major reason for us to get moving now while our area is attracting buyers--it may not be a year or two down the road.

AND--I'm all up for no more yard work!! smaller house area to deal with!! and just a change in general--we're ready for some excitement!!

Spring in the Upstate is beautiful--so this is a perfect time to go for it.:) (I think we're near you...)

Shar

[Kristilyn1]

I think it's a great idea, especially if you feel your neighborhood is in a decline. I would however, consider renting for a short time before I'd decide to buy a condo--it's a big change in terms of mind set. I would however, look seriously into a shorter term loan. If you have more equity than you originally thought, you may be financing less for the new place than you thought you would.

Good luck!

Kristi

[MISSINDI]

To me, the hint of a neighborhood declining might be the biggest impetus of all. You'd want to sell and get the most amount of money possible for your home now, before potential buyers notice the neighborhood for themselves, thereby dropping your home's value in an instant.

And like someone else mentioned, you might be pleasantly surprised at your home's current value since you bought it so long ago. We bought our house 3-1/2 years ago and it's doubled in price since then. Can't think of a better return on our money. ;)

[donleyk]

Plus, IMHO, if your house is the nicest one on the block (and it certainly sounds like it!) you could list at the top of the range for your area and see what bites you get. You don't have to be in a hurry and can stipulate that you'll need X many days to be out. You can start looking at condos at your leisure then get serious when you starting getting offers. :D