Should I pay cash for my retirement house or invest gain from my existing house and make payments on retirement house?

I am planning on retiring in one year (65). I have assets of 1.2 million. I owe $24,000 on current house which is valued at $300,000. We plan on moving to Tennessee where taxes and living expenses are less. Should I pay cash for my retirment house (approx $230,000) or invest gain from my existing house and make payments on retirement house.

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Answered by Kim Miller, CFP®PRO+ in Redmond, WA
You answered your own question: on the face of it it looks like you will clear enough - or nearly enough - from the sale to pay cash for the new house. It the sale proceeds aren't quite enough, it looks like you have the difference. Pay cash. Good luck! | 09.18.14 @ 16:50
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:26
Answered by Alex Bentley, Financial AdviserPRO+ in Pacific Palisades, CA
If it were me, I would absolutely pay cash. | 09.18.14 @ 18:07
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:26
Answered by Joe Saul-Sehy, Financial Adviser in Texarkana, TX
It's always safest to use cash, if possible. I'd make sure you can retire on the money left AFTER you pay cash before you actually make the move....you don't want to have to figure out how to refinance later...... | 09.18.14 @ 21:04
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:26
Answered by Heath Schneider, Mortgage BrokerPRO+ in Las Vegas, NV
A reverse mortgage would allow you to use only some of your cash as a down payment and you could keep the balance in your pocket for reserves. In my opinion this would be the best of both worlds since you would not have a payment on your new home and you would have a sizable amount of cash on the side for other things. | 12.11.14 @ 19:27
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Saving in WI — Pay cash. Never use a reverse mortgage, especially in this circumstance. | 08.22.16 @ 16:15
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:26
Good Question! Everyone's individual circumstance is different. In that regard there are more factors one must consider ,such as your retirement Income, tax bracket, type of assets you own, other debt, lifestyle choices, exotic travel expense, other planned expenses and so on.

Yes, its always good to be debt free espcially in Retirment, however, as one of the professionals mentioned, you may need the cash and would not want to have to refinance in an higher interest rate market. Mortgage Debt is not so bad if properly managed and good loan. Also, taxes on other assets and gains should also be considered, as you may need the interest write-off (e.g Home Mortgage Int Deduction and Property Taxes).

Sounds as if you are under the window of the captial gain exclusion for your principal residence, but that must also be considered. (there's no limit on the number of times you can use the home-sale exemption. In most cases, you can make tax-free profits of $250,000, or $500,000 depending on your filing status, every time you sell a home.

Lastly, since you mentioned having 1.2 million in assets, if that is liquid and subject to Taxation on Interests or gains, again you may need the tax write off.

In that case, you may want to consider keeping your funds borrower the amount what you can afford to pay comfortably ......and depending on loan amount / cost, the interest earned may pay part of your payments and you still have the principal.

Remember every individual circumstance is different and consult your trusted Tax Advisor for specifics to your case.

Hope this helps you ...

| 12.11.14 @ 22:31
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:26
Answered by Julie Cline, Insurance Agent in Monrovia, CA
Pay cash, absolutely. | 06.23.15 @ 15:54
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:26
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Answered by

Kim Miller
Kim Miller, CFP®PRO+ in Redmond, WA

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