# Planning for Retirement - Mortgage information to share



## Myquest55 (Oct 3, 2016)

Just wanted to share an experience regarding mortgages, with those contemplating retirement in the next few years.  

We are in the process of selling a property we bought several years ago - we had hoped  to use it as a vacation home but ended up renting it out.  Now we need to liquidate so we can retire and relocate and I had planned for it to be an investment.  Today, I had to call Navy Federal Credit Union's Mortgage Office for some information needed for the closing.  After that was taken care of, and while I had the agent on the phone, I decided to see if they had any mortgage advice for us. (nothing ventured, nothing gained)  MY plan was to sell both the rental property and our primary residence and pay cash for a new place in Maine but it would be easier for us to purchase a new place BEFORE we sell our house so we know where we are going and don't have to scramble like we always have, to relocate.  We could even rent the new place out for 6-9 months while we wait for this to sell and before we make the move.

So, we are under contract with a buyer for the rental and close next week.  Those $$ will go in the bank for the down-payment, when we find a place we want.  The agent agreed that it would be easier to obtain a mortgage - even on a second house - while my husband is still working.  (It is not impossible to purchase a place once retired but I got the feeling it is a little more complicated)  Anyway, currently the interest rate is the same for a second house as it is for the primary.  There is also something called a "Future Residence" mortgage for a property that you want to rent out for a few years before you actually relocate to it but that rate is currently higher.  (We actually used that rate when we bought that second property.  At that time the rate was cheaper than for a second home.)

The agent did some poking around on his computer and came up with several options for us.  He kindly took the time to explain several plans to me - one is a 3/5 ARM.  If we can put 30% down, it is a very low interest rate that will be automatically refinanced, with a increase cap, in 3 years using the reduced principal amount - not the original purchase price.  That gives us 3 years to sell our primary residence, relocate and decide how much we want to reduce the new principal or pay it off altogether before it re-sets.  I knew that variable rate programs existed but it never occurred to me that it might now work for us better than the general 15 or 30 year fixed rate mortgages we have always used.  It would certainly let us make our move gradually.  

*MY POINT, with all of this, is to recommend to those considering relocating for retirement they call their bank or credit union and discuss options.   Tell them your plans and give them a chance to discuss different programs that might benefit you.  Good luck!*


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## mathjak107 (Oct 4, 2016)

One particular mortgage that interested us is called a reverse mortgage to purchase.

Seniors can put down 40% or so of the purchase price and have no more payments due. You do pay taxes and expenses though.

It is a good way for a senior to live in a better area or buy a better home than their finance's would allow.

But since this program was geared for lower income seniors fee's , the interest rate and insurance on the mortgsge all cost more. That can eat up equity pretty quickly.

But if you don't care about leaving the house to heirs than go buy your dream house that you would not have bought under conventional terms


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