not affording a house

Fox

Tue, Feb 26 2013, 9:21 pm

There are several possibilities:

* Once you retire, you may be able to move to a less expensive area, thus saving money.

* You don't define "government help," but a great option are government-subsidized apartment buildings for retirees where the rent is based on your income. My grandmother lived in one of these, and my MIL currently lives in one, and they are really lovely. In both cases, the buildings attract a wider range of income levels than you might guess, and they have wonderful facilities.

* Everyone talks a lot about how much money you need to retire, but the truth is that it's often a lot easier to live frugally in retirement without resorting to extreme measures. A writer in Money magazine wrote an article a couple of years ago in which he described his mother's very comfortable lifestyle on $24,000 a year based on a small pension, savings income, and Social Security. The same people who claim you "need" to make $100,000 chassunahs are the same ones who claim you "need" a home plus a Florida condo, etc.

* If it's practical and appropriate, you might consider investing in a small apartment building (3 units or so) with your children or other younger family members. Sometimes two incomes can make such an investment possible when a single-family home is out of reach of everyone. Although now everyone needs "space" from family, this used to be a very popular solution.

* Keep your eyes open for condos or co-ops in foreclosure. Though this can be somewhat risky if a building is dominated by forclosed units, there are still some good values. You might be able to get a good deal that you could pay off relatively quickly -- thus leaving you only with monthly maintenance in the future.

Don't despair, though! While homes still the #1 asset for most people, a lot of financial experts are not nearly as enthusiastic about home ownership as they used to be. Some of this, of course, is because of the real estate bubble; however, the sharp drop in real estate prices that occurred around 2008 caused a lot of people to re-examine the conventional wisdom that touted home ownership as a universal goal.

Anyone who owns even a modest home can tell you that houses are money pits. Something always needs replacing, repairing, or some kind of upkeep, and the costs of home ownership prevent a lot of families from saving much money. Houses are also more difficult to maintain as you get older and less able to push a lawnmower around or climb up to unclog the gutters. I'm going to hazard a guess that some of your mortgage-paid-off friends have absolutely nothing but a house to their names -- a great asset, but not a liquid one, and not much help in an emergency or a bad real estate market.

Start researching options where you live now or where you might like to live. Start estimating how much money you'll need, and how much you can anticipate from various sources. Even if the first number is scarily large and the second, scarily small, keep researching and planning. You may be surprised to find that you actually have more flexibility than many homeowners.

mirror

Tue, Feb 26 2013, 9:39 pm

TwinsMommy wrote:

we're in the same boat--- almost 40, still renting. we MIGHT be able to buy in the next couple of years but that's not because we have great savings-- it's only because we live in cleveland where houses are cheapo. we're renting for about $1300 a month and if we buy the house we're living in we MIGHT pay $70,000.

So we figure we'll still be working in our 70's. If we buy now, we'll get a 30 year mortgage... we'll pay it off in our 70's.

How old are you and do you plan to continue working for a while?

I know a couple that got a mortgage in when they were in their 80's for a house. I don't know what the rules are now.