Gardening Grandma
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Post by Gardening Grandma on Oct 10, 2015 9:50:06 GMT -5
So our mortgage has been paid off for the last three years. It has been a great feeling to be 100% free of any debt, but now.....
The lot adjacent to ours is for sale. It's been for sale as long as we've been here, but the asking price was far too high and we figured it would not sell. Recently the owner dropped the price nearly 50% (now $56,000) and people are looking. This is a dead end road, just our property and the adjacent lot. It has a few covenants, but we are concerned enough that we've decided to purchase it. But we don't have the cash and don't want to pull that much from the retirement accounts, so it looks like a cash out refi. But ugh! The thought of owing money to anyone is anathma to us.
I'm mostly thinking out loud here and wanted to bounce it off you guys.
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The Captain
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Post by The Captain on Oct 10, 2015 9:57:25 GMT -5
Can your cash flows cover the payments? If yes then go for it.
Life is too short to have nasty neighbors. Plant a veggie garden.
You're welcome!!
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Gardening Grandma
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Post by Gardening Grandma on Oct 10, 2015 10:27:10 GMT -5
Oh yes, our cash flow would easily cover the payments. If we financed it at 10 years it would be $560/mo, 15 years $404/mo, 20 years about $327/mo.
I'm thinking 20 years and doubling or tripling the payment and then paying the balance in 2019 when DH has to start taking RMDs.
What does bother me a bit is that we may be torn between taking a trip vs aggressively paying off the loan - and after DH's cancer issues I feel life is too short to put off travel.
But it is also too short to risk nasty neighbors....
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daisy
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Post by daisy on Oct 10, 2015 10:30:06 GMT -5
I agree. We are surrounded by open land that is owned by various members of one family (Dh's ex is a member of this family), the rest by the county. I've often thought that if we were to sell they would mostly likely buy our 15 acres just to make theirs contiguous. The Captain and Sroo are right, buy it and then you will always have great neighbors!
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The Captain
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Post by The Captain on Oct 10, 2015 11:21:57 GMT -5
Oh yes, our cash flow would easily cover the payments. If we financed it at 10 years it would be $560/mo, 15 years $404/mo, 20 years about $327/mo. I'm thinking 20 years and doubling or tripling the payment and then paying the balance in 2019 when DH has to start taking RMDs. What does bother me a bit is that we may be torn between taking a trip vs aggressively paying off the loan - and after DH's cancer issues I feel life is too short to put off travel. But it is also too short to risk nasty neighbors.... If you cash flow can cover it, then set it and forget it. I was paying down our current home on a 10 year plan until the kitchen cropped up. You know what - I'm going to enjoy the fruits of my labors a bit and you should as well. You can't take it with you. Not telling you to go nuts, but I sense you're as conservative as we are.
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Ava
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Post by Ava on Oct 10, 2015 12:10:15 GMT -5
I don't understand why you feel like you have to buy it. Nasty neighbors is very relative and most people are pleasant, or at least reasonable enough that you can negotiate issues with them. I live in a condo with THIN walls so I know all about having your neighbors really close. The only issue I've had so far is that the young couple in the next unit moved here and started playing really loud music. So I knocked on their door and nicely explained the situation. I asked the lady to step into my home so she could hear the boom boom boom. She said she'll stop using the surround on the TV. She did that and she also moved the TV so it doesn't stand next to our shared wall. Total bliss. It cost me nothing. Why the idea that you have to avoid people at all costs?
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Post by The Walk of the Penguin Mich on Oct 10, 2015 12:28:41 GMT -5
I don't understand why you feel like you have to buy it. Nasty neighbors is very relative and most people are pleasant, or at least reasonable enough that you can negotiate issues with them. I live in a condo with THIN walls so I know all about having your neighbors really close. The only issue I've had so far is that the young couple in the next unit moved here and started playing really loud music. So I knocked on their door and nicely explained the situation. I asked the lady to step into my home so she could here the boom boom boom. She said she'll stop using the surround on the TV. She did that and she also moved the TV so it doesn't stand next to our shared wall. Total bliss. It cost me nothing. Why the idea that you have to avoid people at all costs? It's not the neighbors, it's the space. I do understand why the OP wants to buy this land. It's probably the same reason we did. We live at the end of a dead end road, and our side yard is a forest. We own the property all the way to the road - about 100 yards away. No one can build there, and on this side of the house we have NOTHING in our way. Our window dressings are the fall colors right now. Since the land was purchased, it has probably increased in value about 400% in 12 years as there is no place else to build. The adjacent property to this land is up for sale, and it's going for over $1 million because this is a wanted development and there is really no place else to build houses. Even if that land sells, it won't have an impact upon our enjoyment of the house but it has given us the idea that if we sell this property and move out altogether, we'd have enough to be able to afford a house overlooking Puget Sound. The only thing I regret right now is that we didn't buy the land on the other side of us. They wanted too much for that property, it was sold and a house was built. Their kitchen looks directly into our master bathroom, so we can never open the shades. Previously, we had forested land there too. Our neighbors are not noisy, it's an elderly couple. There are 4 houses at the end of this road and everyone pretty much looks out for everyone else. There is no animosity.
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phil5185
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Post by phil5185 on Oct 10, 2015 15:29:17 GMT -5
The buyer of our rental 2 weeks ago got a 30 yr, FR, 3 3/4 % loan. That's what I would look for. And I'd keep it full term, or when/if you sell.
Personal opinion. Our generation has become so "safe", so "6 month ER, so PC, that people are afraid to become wealthy
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Ombud
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Post by Ombud on Oct 10, 2015 15:34:52 GMT -5
The buyer of our rental 2 weeks ago got a 30 yr, FR, 3 3/4 % loan. That's what I would look for. And I'd keep it full term, or when/if you sell. Personal opinion. Our generation has become so "safe", so "6 month ER, so PC, that people are afraid to become wealthySo that!! Since when is a 3.75% tax deductible loan on an appreciating asset bad??
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Ava
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Post by Ava on Oct 10, 2015 17:27:26 GMT -5
I don't understand why you feel like you have to buy it. Nasty neighbors is very relative and most people are pleasant, or at least reasonable enough that you can negotiate issues with them. I live in a condo with THIN walls so I know all about having your neighbors really close. The only issue I've had so far is that the young couple in the next unit moved here and started playing really loud music. So I knocked on their door and nicely explained the situation. I asked the lady to step into my home so she could here the boom boom boom. She said she'll stop using the surround on the TV. She did that and she also moved the TV so it doesn't stand next to our shared wall. Total bliss. It cost me nothing. Why the idea that you have to avoid people at all costs? It's not the neighbors, it's the space. I do understand why the OP wants to buy this land. It's probably the same reason we did. We live at the end of a dead end road, and our side yard is a forest. We own the property all the way to the road - about 100 yards away. No one can build there, and on this side of the house we have NOTHING in our way. Our window dressings are the fall colors right now. Since the land was purchased, it has probably increased in value about 400% in 12 years as there is no place else to build. The adjacent property to this land is up for sale, and it's going for over $1 million because this is a wanted development and there is really no place else to build houses. Even if that land sells, it won't have an impact upon our enjoyment of the house but it has given us the idea that if we sell this property and move out altogether, we'd have enough to be able to afford a house overlooking Puget Sound. The only thing I regret right now is that we didn't buy the land on the other side of us. They wanted too much for that property, it was sold and a house was built. Their kitchen looks directly into our master bathroom, so we can never open the shades. Previously, we had forested land there too. Our neighbors are not noisy, it's an elderly couple. There are 4 houses at the end of this road and everyone pretty much looks out for everyone else. There is no animosity. Ok, I understand what you are saying. You are looking at it as an investment.
My comment about nasty neighbors came from the first answer to the OP:
Life is too short to have nasty neighbors. Plant a veggie garden. And the OP liked this comment, so I thought that was why they were trying to buy the land.
From the point of view of an investment, I know OP is retired and at this moment does not have the money on hand. She's been free of debt for three years so far. That's a wonderful thing, I believe. Being debt free is worth much more than a thousand investments, in my book. It gives you real freedom. Go back to debt for what? To speculate? You are already retired, correct? You are ok financially, I believe. I wouldn't even bother in that case. Enjoy your life and your money. Take a nice trip somewhere you want to go if you can afford it.
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The Captain
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Post by The Captain on Oct 10, 2015 17:41:48 GMT -5
It's not the neighbors, it's the space. I do understand why the OP wants to buy this land. It's probably the same reason we did. We live at the end of a dead end road, and our side yard is a forest. We own the property all the way to the road - about 100 yards away. No one can build there, and on this side of the house we have NOTHING in our way. Our window dressings are the fall colors right now. Since the land was purchased, it has probably increased in value about 400% in 12 years as there is no place else to build. The adjacent property to this land is up for sale, and it's going for over $1 million because this is a wanted development and there is really no place else to build houses. Even if that land sells, it won't have an impact upon our enjoyment of the house but it has given us the idea that if we sell this property and move out altogether, we'd have enough to be able to afford a house overlooking Puget Sound. The only thing I regret right now is that we didn't buy the land on the other side of us. They wanted too much for that property, it was sold and a house was built. Their kitchen looks directly into our master bathroom, so we can never open the shades. Previously, we had forested land there too. Our neighbors are not noisy, it's an elderly couple. There are 4 houses at the end of this road and everyone pretty much looks out for everyone else. There is no animosity. Ok, I understand what you are saying. You are looking at it as an investment.
My comment about nasty neighbors came from the first answer to the OP:
Life is too short to have nasty neighbors. Plant a veggie garden. And the OP liked this comment, so I thought that was why they were trying to buy the land.
From the point of view of an investment, I know OP is retired and at this moment does not have the money on hand. She's been free of debt for three years so far. That's a wonderful thing, I believe. Being debt free is worth much more than a thousand investments, in my book. It gives you real freedom. Go back to debt for what? To speculate? You are already retired, correct? You are ok financially, I believe. I wouldn't even bother in that case. Enjoy your life and your money. Take a nice trip somewhere you want to go if you can afford it.
Hmmm...makes me wonder if I'm that neighbor? In all seriousness, I'm glad you've had good luck with neighbors. At our last house we had two neighbors who were less than satisfactory. 1. One thought our back lot was his personal dumping ground. His kid took an ax to some of my fruit trees and he tried denying it until another neighbor (and friend who told us who did it) came over and told him he saw the kid doing it and told him to stop it. After that we had all kinds of stuff appearing in the back lot. There was only two ways to access that area of our property - you guessed it - the bad neighbor's property or the friends lot. It had to always be done at night because the friend was in his garden almost the whole day. 2. Another neighbor who set up their gutters and pool overflow/pump to drain onto our property. Then tried to claim they had no idea the landscape people must have done it... Our current house is on an acre (last was over 2). Fortunately we have much better neighbors here.
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phil5185
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Post by phil5185 on Oct 10, 2015 17:55:19 GMT -5
Debt free? Speculate?
That's what I meant by a generation of risk averse people. The planners, the magazines, the govt, has given us IRA, 401, UI for 99 wks, SS,told us about 6 mo of EF,warned us about CCs, yada. Now people are afraid to manage risk and build a family portfolio, they merely look at their retirement "salary" and settle. Unless you're dave ramsey, debt-free is not auch a great status - I became wealthy after I QUIT that.
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debthaven
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Post by debthaven on Oct 10, 2015 18:03:57 GMT -5
I would buy it, but only if I had the discipline not to let it stop me from doing the things I wanted to do with my DH.
Personally the neighbours probably wouldn't bother me, but the noise and disruption of them building a house next door to me would.
I'd take the 15Y loan and "set it and forget" it, making your travel the priority.
Then prepay it if you want, AFTER you and DH have done whatever you planned for the year.
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Tiny
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Post by Tiny on Oct 10, 2015 19:38:51 GMT -5
I'd buy the land - and use your home equity to do it. It sounds like you and hubby have planned for your retirement so this isn't a "speculative" or "risky" thing.
If you only re-mortgage for 60K you might not get a very good rate - it will probably be between 4 and 5% for 30 years (a 15yyear mortgage probably won't be much better). NOT that 4 -5% is bad... just saying don't expect 3.75% on only 60K...
I'd remortgage your house - I'd then pay the 'mortgage' amount for 30 years or whatever. no pre-payment (assuming the loan is at 5% or less).
I get the whole debt free thing... I'd suggest just not thinking of the new mortgage as "debt" - think of it as a 'fixed expense' and pay it off on schedule (no big rush to be debt free).
Not to be morbid but when you are dead and gone - odds are the properties will be sold and it won't matter a zot if there is a mortgage - the mortgage will be paid and the property sold and there will be some left over for your heirs. Not all debt is bad - sometimes DEBT increases wealth OR makes life more enjoyable - for very little expense and risk. Just saying...
FWIW: I had a paid off house for 6 weeks... it wasn't as great a feeling as I thought it would be. I got a new mortgage (only 80k) and bought a rental property. All of my mortgages have been under 100K - that's why I know about how you don't get the really 'good low rates' when getting a mortgage. The banks reward people who borrow 200K plus with nice low interest rates.
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Gardening Grandma
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Post by Gardening Grandma on Oct 10, 2015 21:47:44 GMT -5
The buyer of our rental 2 weeks ago got a 30 yr, FR, 3 3/4 % loan. That's what I would look for. And I'd keep it full term, or when/if you sell. Personal opinion. Our generation has become so "safe", so "6 month ER, so PC, that people are afraid to become wealthySo that!! Since when is a 3.75% tax deductible loan on an appreciating asset bad?? To clarify, we are looking at 10 yr at 3% or 15 yr at 3.125%, or 20 yr. The tax deduction won't help us as the standard deduction is larger than all our tax deductions combined. I doubt the land will appreciate much, but pretty sure it won't go down either... There are other lots in the neighborhood. Our motivation is, primarily, to have control over what happens there.
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Ombud
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Post by Ombud on Oct 10, 2015 22:53:16 GMT -5
So that!! Since when is a 3.75% tax deductible loan on an appreciating asset bad?? To clarify, we are looking at 10 yr at 3% or 15 yr at 3.125%, or 20 yr. The tax deduction won't help us as the standard deduction is larger than all our tax deductions combined. I doubt the land will appreciate much, but pretty sure it won't go down either... There are other lots in the neighborhood. Our motivation is, primarily, to have control over what happens there. So it's a quality of life investment? Sweet!
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Gardening Grandma
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Post by Gardening Grandma on Oct 10, 2015 23:06:03 GMT -5
Ombud, I hadn't thought of it in those terms, but that is it - exactly.....
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cronewitch
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Post by cronewitch on Oct 11, 2015 2:10:51 GMT -5
Once you are old there is little advantage to paying ahead on the mortgage. My ISO got a new house at 66 with a 30 year zero down mortgage. The realtor said he could pay extra to get it paid off sooner but I told him not to do that. If he sent them say an extra 100 a month for 10 years it would knock a few years off the mortgage. Why would he care if it was paid off at 96 or 86? He is now 68 and smokes, overweight and coughs until he can't breathe sometimes, he won't see 86 so why not enjoy that $100 a month now? If he needed a new well or something he would need to refinance to get the few hundred back.
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moneymaven
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Post by moneymaven on Oct 11, 2015 6:02:41 GMT -5
I would do it.
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bookkeeper
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Post by bookkeeper on Oct 11, 2015 8:10:08 GMT -5
You are considering trading one asset (cash) for another asset (land).
Buy the empty lot, you may never get this opportunity again.
Your home will be more valuable with the extra acreage.
I would finance the purchase at the rates you described. DH and I have been retired for a year, and I am surprised how available financing can be for people without jobs.
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alabamagal
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Post by alabamagal on Oct 11, 2015 8:47:21 GMT -5
Just do it !
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bookkeeper
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Post by bookkeeper on Oct 11, 2015 9:17:38 GMT -5
You are considering trading one asset (cash) for another asset (land).
Buy the empty lot, you may never get this opportunity again.
Your home will be more valuable with the extra acreage.
I would finance the purchase at the rates you described. DH and I have been retired for a year, and I am surprised how available financing can be for people without jobs.
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Bonny
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Post by Bonny on Oct 11, 2015 11:29:30 GMT -5
Once you are old there is little advantage to paying ahead on the mortgage. My ISO got a new house at 66 with a 30 year zero down mortgage. The realtor said he could pay extra to get it paid off sooner but I told him not to do that. If he sent them say an extra 100 a month for 10 years it would knock a few years off the mortgage. Why would he care if it was paid off at 96 or 86? He is now 68 and smokes, overweight and coughs until he can't breathe sometimes, he won't see 86 so why not enjoy that $100 a month now? If he needed a new well or something he would need to refinance to get the few hundred back.
Gardening Grandma,
Buy the lot and go on the vacation(s). You KNOW life is short.
You don't win the race leaving the biggest pile to your heirs.
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CCL
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Post by CCL on Oct 11, 2015 11:47:20 GMT -5
I don't understand why you feel like you have to buy it. Nasty neighbors is very relative and most people are pleasant, or at least reasonable enough that you can negotiate issues with them. I live in a condo with THIN walls so I know all about having your neighbors really close. The only issue I've had so far is that the young couple in the next unit moved here and started playing really loud music. So I knocked on their door and nicely explained the situation. I asked the lady to step into my home so she could hear the boom boom boom. She said she'll stop using the surround on the TV. She did that and she also moved the TV so it doesn't stand next to our shared wall. Total bliss. It cost me nothing. Why the idea that you have to avoid people at all costs? I'd say you got lucky. I've never lived anywhere that didn't have nasty-ass neighbors at one point or another. Buy it!
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GRG a/k/a goldenrulegirl
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Post by GRG a/k/a goldenrulegirl on Oct 11, 2015 12:39:42 GMT -5
Call.the.realtor.NOW.
Buy it.
You will be kicking yourselves for the rest of your time in that house if you don't.
There is a high probability that you will get fabulous neighbors if you don't buy. But the construction and the resulting domestic noise and busyness will change your living environment. You could always sell it down the road IF you needed to.
Besides, you have the money, just not in available cash. What will the interest cost be for 15 years? I'll bet it's fairly reasonable for both an asset AND some control over the quality of your life.
But it. Buy it today.
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TheHaitian
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Post by TheHaitian on Oct 11, 2015 13:14:27 GMT -5
So in the same line, who should I contact if I want to buy the land next door?
It seems it was seized by the town for non payment of property taxes. So what department in the town office should I contact?
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moneymaven
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Post by moneymaven on Oct 11, 2015 13:54:03 GMT -5
So in the same line, who should I contact if I want to buy the land next door? It seems it was seized by the town for non payment of property taxes. So what department in the town office should I contact? Start with the assessor or treasurer's office. They will get you to the right people.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Oct 11, 2015 14:57:20 GMT -5
Absolutely buy it.
I agree with the sentiments about space. Granted I'm on the West Coast (Nor Cal and PNW), so we are brought up to be used to more space.
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CCL
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Post by CCL on Oct 11, 2015 17:47:46 GMT -5
So in the same line, who should I contact if I want to buy the land next door? It seems it was seized by the town for non payment of property taxes. So what department in the town office should I contact? Some places auction them off then give the "owners" a year or so to catch up on their bill including interest at s fairly high rate. If they get caught up they get it back and the new "buyer" gets to keep the interest $$ for their trouble. If they don't get caught up, the new guy gets to keep the property. I've been to a few of these tax sales. Makes for an interesting day. I was outbid on every one of them. They usually publish upcoming auctions in the local paper along with the addresses. I haven't been to any in a few years. You may be able to look the info up on your county or city website.
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Gardening Grandma
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Post by Gardening Grandma on Oct 11, 2015 17:56:21 GMT -5
Thank you for all the responses. I've contacted the mortgage co we used for our house, filled out the application and emailed all the required documentation. As soon as the loan officer sends me the preapproval letter, I am calling the RE agent to make an offer...
debthaven and Bonny, I've also informed DH that we won't be giving up our planned trip next year.
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