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Originally Posted by logdog
I've been following TV for some time now and I know there are some very smart people out there, including some financial planners. We made our Lifestyle Preview a couple of months ago and immediately put our house on the market. Unfortunately, we're resigned to probably having to wait till next year for the market to start moving again. My question is, in today's economy, is it better to liquidate my mutual funds (which have lost a lot of value in the past year) and pay cash for a house or take out a mortgage and use monthly withdrawals from the funds to pay the mortgage? I have a decent government pension and military health benefits to cover day to day expenses. In the past, my goal was building wealth for retirement. But now that I am retired, is better to pay off a house and not have to worry about the stock market? Our economy seems much more unsettled these days than any time since 9/11. I would appreciate your thoughts.
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I agree with most of the others: Lot's of variables, including your own Risk tolerance. If, especially after the blood bath on NYSE which continues now into other Markets, the possibilty exists taht a longer range outlook could spell a chance for Savings Earnings to Exceed Mortgage Interest, even with potentailly such "instruments" as CDs. No one---well, probbaly amost, do not want Carter tyope Inflation, but CDs paid 16% or more FDIC Insured. I personally doubt double digiit reurns again, but those CDs could match/exceed say a 5.75% Mortgage--and you would have Captial to touch if needed, albeit depending on CD terms, at a cost. Also, Home Equity (HELOC) could be a cushion---either way, w/ or w/o Morgage.
Finally, you need to consider this is really a "nice" problem: havingthe $$$ to pay in full, and the ability to qualify for a Mortgage. From that perpsective: no real wrong answer. It's what makes you happy/satisfied. I don't see anything wronf, inherently, with a Mortgage. (and you may be able to BUY at a good price now!!!)
Good Luck on your decision.