Is it best for me to pay a large down payment on a house or 10%?

Question

My wife (53) and I (51) work for a company that provides our housing. We do not own any real estate. We have approx. $100,000 in our retirement 403K. and very little in taxable savings. I receive a pension of $18,000 per year from a former job. Besides this pension and our current employement, that is it. We can retire at 55. We want to buy a house in the next 4-5 years. Upon retirement Should we take a large portion from our 403K as a down payment or a small portion of say, 10%?. We expect to buy only a modest home in Texas.

Answer 1

I think I would put 20% down. It will get you the very best interest rates.

If I were about to retire I would small payments or no payments just for the sake of security. I know that may not make financial sense but I like to sleep soundly and not worry.

You should get the loan before retirement because they would rather make a loan based on current income.

Answer 2

I would use the least amount possible to get into a home. If you decide over the long run to lower your mortgage simply add an additional amount to your monthly mortgage and mark it as principal payment to your lender.

This will reduce your mortgage over the long run. You never want to be equity rich and money poor.

Once you retire it it hard to get financed again, because you are on a fixed income, and if you have sunk the majority of your savings into a home you might not be able to refinance your home for an emergency.

This way you have your home as well as your savings and a good low monthly mortgage payment.

Not only that you have a tremendous tax write off. See your tax consultant for tax consulting.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

DON'T MESS WITH TEXAS!!!!

It's BEST to put down as little as possible when purchasing a NEW home.

You can get 100% financing in TEXAS from Wells Fargo Home Mortgage www.wellsfargo.com

Its a First Mortgage and a Home Asset Account (HE Line of Credit) all in one account or 100% financing.

Visit a local Store in your area and ask to speak with a WF Home Mortgage Consultant and get a FREE Consultation.

You can also get more resources about prospective areas for retirement living at:

www.city-data.com (Enter ANY city)

www.homestore.com

www.50states.com

www.census.gov

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Your plan to make a RE investment in 304 years is wise. It's the American Dream!

You may also want to consider OTHER affordable states for retirement:

- IDAHO
- OREGON
- UTAH
- MONTANA
- WASHINGTON

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Another great site is for BUDGETING purposes:

www.simpleplanning.net (BUDGETING)

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DO NOT USE YOUR RETIREMENT SAVINGS TO BUY A HOME - KEEP IT IN SAVINGS AND BUILD YOUR BALANCES FOR RETIREMENT! :-)

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Have a great week ahead!
GOOD LUCK! :-)

Answer 4

Congratulations!
It's never too late! Buying a home is one of the biggest investments we will ever make. And you seem to be on the right track by asking around.

I think you have it right. 10% in my opinion, is the ideal downpayment for a home.

Don't go for a 100% loan. The monthly payments are a lot higher.

This is what I would go for:

1st Loan: 80%
2nd Loan: 10%
Downpayment: 10%

The 2nd loan is too avoid paying "Private Mortgage Insurance"(PMI), which is a waste.

I hope this helps.

Answer 5

Hello,
from what i have read I really see using your pension for a down payment. Housing in Texas is decently priced so you can get a good size property there for a decent price. I would really consider saving that pension and using it.

Answer 6

Pay down 150K, get a private loan for 50K and determine they permit you to pay it off early. Then pay that off as quickly as achieveable yet make a minimum of the required very own loan cost in step with month.