Mortgage issue

CateBaker · June 2015

Hi! My husband and I own a home and will put it on the market this month. We've decided to move to a smaller city. I will be retiring this summer and my husband works from home. We have no debt, loan or mortgage and we've got sufficient cash to buy another home in our new destination. But I wonder, if it would be better to apply for and >get pre-approval for a mortgage in the range of the house we are looking at and when it gets approved, go about buying a house. Once we sell our old house proceed to pay off the mortgage. I might sound like a neophyte it's because I've got little experience in mortgages. Any advise? Edited to remove link.

Erikan73 · June 2015

What is the housing market like where you currently live? If buying a new house & paying it off in cash would but a financial strain on you until your current house sells, I would probably consider looking into a 15 year mortgage. I say 15 because those tend to have better interest rates I believe. If having your house on the market for a few months won't impact your finacial comfort level, then skip the paperwork involved with a mortgage and just pay for your new home.

Sisugal · June 2015

IMO that depends on your total financial picture. In addition to the $$ to pay for your new home in cash, will you also have a good 6 month's emergency fund still in place?

I see no reason to get a mortgage if you do not need one. Why pay the extra costs of financing when you do not need to?

If you need to be in your new location prior to selling your current home, then I would rent a small cheap apartment until your house sells - meanwhile, getting acquainted with your new location and where you might want to live

CuriousKiddosMama · June 2015

Yes, you need to be preapproved when searching for a house. In case this wasn't just a spam post, the biggest thing I feel you need to consider is two mortgages. Can you pay 2 mortgages if your old house doesn't sell? For 6 months, a year? You need to consider worst case scenario in this situation.

CuriousKiddosMama · June 2015

Never mind, I was too distracted by the link. If you have the $ for a new home, it makes no sense to pay closing costs of a loan. Just pay for a house.... Thinking this is just spam

brij2006 · June 2015

If this isn't spam (your link is throwing me off), just pay cash for the house. No sense in trying to debt leverage yourself when you have the means to purchase a home in cash. It's just setting yourself up to have something happen. Might as well take 0 risk by not having a mortgage.

AprilZ81 · June 2015

Paying cash is great but you do need to consider the big picture of making sure you still have enough income to pay utilities, taxes and homeowners insurance. You still need to have an emergency fund, but since you won't have a mortgage payment to make it doesn't need to be quite as big.

FirstMate06 · June 2015

CuriousKiddosMama said:

Never mind, I was too distracted by the link. If you have the $ for a new home, it makes no sense to pay closing costs of a loan. Just pay for a house.... Thinking this is just spam

All this. Why end up making yourself pay more for a mortgage if you can comfortably pay cash? Paying cash also allows for quick closing and is really attractive to sellers, so it might help you get a better deal. I would just make sure you have a full emergency fund like PPs said and go for it. Good luck!

Edited for spelling. Oops!

Mortgage issue

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