About Margaret Jaffe Expertise Getting ready for old age before you reach it. Beat inflation. Worried about the future & how you will manage? What about your Social Security? Assets you have that might be a bank account (not necessarily money). Live the "old way" not the new way! That is disaster in the making!
Experience Scottish born & bred. Grew up in time of war, understand the ways of the world & am canny (careful). I never buy anything of value that I cannot sell for 100% profit. Am over 60 and concerned about the large number of people approaching old age without a clue of how to survive.
Organizations Have been a real estate broker for number of years, business owner for 30 yrs.
I am in one of those "If you don't do it now..." situations.
I have never played the equity game, have always rented but would like to purchase a townhome before interest rates go back up.
My particulars: 51 years old, single male, income of 45-50K per year, I have 20K in checking/liquid accounts, 40K total in IRA and 401K accounts, no other assets. Monthly rent $900 /mo, excellent credit rating.
I am looking for a townhome worth somewhere between 150-160,000.
I'm not sure that with as little assets I have to prepare for "retirement" (if ever), it might be wiser to keep renting and salt whatever money I might save into retirement investments.
The other choice is to finally have something to build some equity within and have a nicer place to live.
Any advice would be very appreciated.
Thank You,
Steve
Answer Hi Steve, Interesting question. First thing I think of, you are 51 now but if you can can think far enough ahead to when you are 65 and you have a fully paid for home it can be such an incredible comfort as you head into "older" age. I don't know if you are in a 'hot' market or a more normal one but if it is hot I would think about buying further out. Some of the very hot markets may cool down. One thing to remember is that real estate is a long-term investment and I once did a 20-year analysis of an area and found that thru really hot, some cool and some downright cold that the appreciation rate was steady over 20 years at 3% (each year) and there is nothing wrong with that as an investment, especially as it is based on your down payment & closing costs. Most people forget this but it is true. If you buy a $160K home at 5.75% for 30 years your payments will be as follows: $933 (this does not include taxes & ins.) You can deduct interest & property taxes on your income tax return which may mean that buying a home & renting amounts to the same out of pocket expenses but with renting it is not a win-win situation. Another thought, if you do decide to buy meet & talk to several Realtors with the goal of selecting one to be your buyer-broker. The seller should pay the commission. Good place to meet is at Open Houses - when eventually you talk to lenders (shop around for the best) get a loan with no mortgage insurance, can't deduct this & it is something you really don't want. Better to get a 80-10-10 loan with all interest deductable. I would suggest checking your credit score with MyFico.com, good ammunition if you haven't already. With lender get all closing costs in writing, ask for references, avoid as many "junk fees" as possible. You can also pay one extra mortgage payment in December and pare about 8 years of your mortgage. Make sure you get a mortgage where you can pay more without a penalty . Don't get a 15 year mortgage, not necessary if you have the discipline to pay more as you want to. I hope I haven't given you an avalanche of information but I think you know how I feel about the older generation being safe in their own homes. You can still sock as much money as you want in your 401K's. Good luck, Margaret
