Hi Fools, any thoughts re: retirees partially financing a second home at the tender age of 72?
Hi @tracyo,
Welcome to the Fool.
When we decided to build a new house in Sep 2020 (at 70), we found a nice building lot and wrote an offer on Dec 9th. I made it a cash offer but set closing for Jan 31. The realtor gave me a couple AG lenders to talk with. I was able to get a signature mortgage to cover about 1/2 the land cost at 3.84% so I did it and we closed on Jan 15th.
But this is our primary home. If it was a 2nd home, I do not believe I would mortgage it.
But maybe that is me since we built this place to “avoid” needing a second home.
Does that help you?
Gene
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Have you looked into renting instead though? With rates so high, a mortgage on vacation home would seem excessive in this high rate environment.
Thanks for your response, Gene. Congrats! Sure wish we were in the mortgage interest rate environment of 2020!
You didn’t post enough information for us to really come to an informed conclusion.
But the short answer is I don’t think it is crazy. Interest rates are high, but they aren’t crazy high.
My first mortgage was 7ÂĽ%. The ÂĽ is important because back then decimals had not yet been invented and mortgages were quoted in fractions. But I thought that was a screaming bargain.
It really comes down to the best use of funds. If you want to be liquid and can afford it, maybe financing is the best way to go. If you want to invest for growth and don’t need cash, maybe cash is the way to go because it would be tough to reliably get a higher rate of return than mortgage rates over any reasonable time frame.
There is some merit to keeping money out of the house, where you can access it easily. I think that would be my primary driver.
Totally off the subject, but I can’t resist distorting everyone’s perspective. My first mortgage was in 1982. 16%, variable, no cap.
I think that is good perspective. Mortgage rates used to be much, much higher within the living experience of people on this board.
Will they be that high again? No idea. Is it possible? Yes it is.