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Subject:  Re: Buy vs. Rent in retirement Date:  2/5/2007  2:50 PM
Author:  alan81 Number:  417 of 116904

Here is how I always thought about the mortgage issue in retirement...
A mortgage is really you selling a bond to somebody else. MOST people in retirement will have a certain percentage of their funds in bonds. Does it make sense to sell a bond (buy a mortgage?) and then turn around and use the money to buy a bond? I basically look at the home equity part of my net worth as as part of my bond portfolio in my asset allocation that I get "friction free".

Put another way, since the house is paid off more of my spending is discretionary and as such I can take a little more risk with the equity piece.

In terms of buy versus rent... if you know where you want to live, buy. If you are shopping around, trying out different places... then rent until you decide to "settle down".
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