15 versus 30 year home loan?

[discoversimplicity]

My husband and I are both retiring early from our jobs. I bought my own home using a 30 year loan and have 21 years left. My husband is working on paying off his debts (definately by the end of this year).
Now we want to buy a "retirement home" with around 10 acres for a mini-farm and garden. My house will rent out just fine and we should be in the black. But with the new home, I want to go for a less expensive home and finance for 15 years, and my husband wants a more expensive home to finance for 30 years. We can afford the 15 year loan but our fun money would be much more restricted. My husband wants the 30 year loan and to pay extra on it whenever we can. The problem is, I don't know if he's disciplined enough to do that or not . Between the two of us, he's the big spender. He likes buying expensive toys, going on expensive weekend getaways etc. I can do without those things although I enjoy them too. Has anyone else been in our predicament? If so, what decision did you make?

Any responses are greatly appreciated

 

[savingdogs]

I haven't been in your situation but I say pay it off, pay it off, pay it off!

 

[SKR8PN]

Sell the first home to help clear the way for the payments on the retirement home.
FIRST....I wouldn't take on TWO mortgages in this economy for all the tea in China. Home values are still falling. By the time you sign the papers, you'll already be upside down on your retirement home.

SECOND...All it would take is for one renter to destroy the rental house, setting you up for large repair bills AND the payment on your retirement home........

 

[Marianne]

I grew up with the 'pay it off' thinking. But then I met a guy that took out a 30 year mortgage on his retirement home. He said that the payments were low so he could actually enjoy retirement, his grown kids didn't need the house, so they could sell it after he died and split the money. He only lived 5 years after he retired, so I think he did the right thing.

Even if you set up the retirement home on a 30 yr, all you have to do is make one extra payment per year. I'm sure you probably already know this - Divide one payment by 12, pay that amount to the principle each month and you'll have the new house paid off in arond 16 years without being locked into that higher payment.

In a perfect world, I'd buy the less expensive house and be in charge of the spending.

 

[offgridgirl]

I would be scared to have 2 mortgages going into retirement.

I would also choose the 30 year mortgage and make 2 extra payments a year. It's like having a safety net...just in case you can't make the higher 15 year payment for some reason. I like security and safety nets Oh yeah...and I would go for the less expensive home.

Since your hubby is a spender I would try to send any extra money in for your mortgage as soon as you can.....just apply it to the principle.

 

[gettinaclue]

If it were me? I'd sell the house and buy a smaller one with the land on a 30 year and pay it off early.

I'd be way to concerned with having two mortgages. One is bad enough LOL. There's also the upkeep of the properties to think of and insurance and taxes and worry about bad renters. No thanks. It is not unusual at all for bad renters to tear up the house and steal the appliances when they move out.

Not worth the worry for me.

Having the smaller on a 30 year would allow for the occasional toy and get away while still being able to pay down the debt.

Good luck in retirement! I hope it is everything you want it to be!

 

[Bubblingbrooks]

Never, never , never take on two mortgages.
The chances of you losing both houses is very high in cases like that.

 

[AnnaRaven]

My husband and I are both retiring early from our jobs. I bought my own home using a 30 year loan and have 21 years left. My husband is working on paying off his debts (definately by the end of this year).
Now we want to buy a "retirement home" with around 10 acres for a mini-farm and garden. My house will rent out just fine and we should be in the black. But with the new home, I want to go for a less expensive home and finance for 15 years, and my husband wants a more expensive home to finance for 30 years. We can afford the 15 year loan but our fun money would be much more restricted. My husband wants the 30 year loan and to pay extra on it whenever we can. The problem is, I don't know if he's disciplined enough to do that or not . Between the two of us, he's the big spender. He likes buying expensive toys, going on expensive weekend getaways etc. I can do without those things although I enjoy them too. Has anyone else been in our predicament? If so, what decision did you make?

Any responses are greatly appreciated

Who has the decent credit report? You, I imagine? Remember that getting qualified for 2 mortgages at a time is difficult. His credit may not be good enough.

But, assuming you can qualify, it depends on the differences in rates you can get. Here's a mortgage calculator where you can compare the information.

 

[valmom]

Sell the first home to help clear the way for the payments on the retirement home.
FIRST....I wouldn't take on TWO mortgages in this economy for all the tea in China. Home values are still falling. By the time you sign the papers, you'll already be upside down on your retirement home.

SECOND...All it would take is for one renter to destroy the rental house, setting you up for large repair bills AND the payment on your retirement home........

Absolutely true- every part of it! Do not rent!

When we moved up here, I couldn't sell my old house, so we rented it out (to a friend) for a year. It cost us mega bucks to fix it up after she left so we could put it back on the market. And 4 huge dumpsters of trash! Including a broken washer/dryer left on the lawn.

Go for the 30 year mortgage and pay it off as fast as you can. Don't bother locking yourself into the 15 year payments, just make them. You can get paid off in 15 years anyway. He doesn't have to be disciplined- you be the "money" person and bring your discipline to paying it off. I am in our relationship because my SO likes expensive things. (Well, I have the horses which are money sinks, but we keep them as cheaply as possible!)

 

[Marianne]

IMO, not every renter is a deadbeat or will tear up the place. And each house will be the collateral for that particular mortgage. As long as there is equity (which of course, there will be), you have options if the place sits empty for several months (interest only payments, borrowing against the equity, etc). It's if you want the hassle.

We had a rental house for several years with good luck. No one tore it up, it never sat empty between renters. Best of all, someone else made the payment on property that we made a profit on each month and when we sold it. Lots of people do it. We had friends that had three rental properties when they retired. It was added income and they had good luck, too.

Ultimately, you're the only one here that knows what the market is like in your area - for buyers, sellers and renters. What about talking to a banker? You'll want to get pre-approved before looking for another place anyway, and they can tell you what's currently going on in your area and what your financing options are.