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Need advice on buying vacation/future retirement home close to be

12 years ago

I need advice on our (husband and myself) planned purchase of a vacation/future retirement home. Hopefully the helpful people here will supply it!

First some background:

We’ve lived in the northern VA suburbs of DC for over 25 years, and we’ve always know:

that we didn’t want to live here forever, especially not once retired,

that we wanted to live very close to the ocean

that we want to live further south than where we are. I wanted farther south (FL) than hubby, who thought NC was fine; we’ve settled on Charleston SC area

Hubby will retire in 4 years; I plan to work for at least 8 more years.

We have no debt other than our house and it would sell today for at least 300K more than our mortgage, but we don’t plan to sell until I retire. Our retirement accounts are fairly substantial, but we’ve never had a whole lot of other savings until we recently inherited some money which is just sitting in a savings account because we couldn’t figure out where/how to invest it.

For years I thought we’d never be able to afford to live really close to a beach. But with the housing prices being quite low and interest rates being low, in addition to both of us making more now than we’d previously expected to make, plus the inheritance, we realize that we could afford to buy a house within a few blocks of a beach now. Presumably we could also afford to buy one later also, because it’s unlikely that house prices will go up tremendously in the next 4 - 8 years, but it is a possibility that they will. Also - interest rates are so low now and I don’t believe they will stay that low over the long haul.

So - (and sorry this is so long ) we’ve decided that it makes sense to buy now. The idea is that we can use the house as a vacation house now and probably retire to it later. At that time we’d sell our primary residence here in VA.

We’ve started looking at houses for sale (via internet) on the beaches north and south of Charleston, and we’re fairly sure we want to buy on Isle of Palm, which is just northeast of Charleston. We’re planning a trip there in a couple of weeks to look at houses, and hopefully find one and make an offer. The ones in our price range are a couple of blocks from the beach - and a couple of blocks from the inter-coastal waterways - about the middle of the island.

The things I need advice about are:

Does anyone have any advice, based on experience or otherwise, about living on a beach island?

What are the things we should look at and consider about moving to a new state that we might not be thinking about? I know the sales tax is a lot higher there, and the state income tax is about the same, but what are the other issues I should think about?

There are LOTS of houses for sale on Isle of Palm, as well as everywhere we’ve looked in the Charleston area. But on Isle of Palm, I think it’s about 49% of houses that are for sale. That is a huge amount!

What do you think that means for housing prices there? With that many homes on the market are the prices likely to keep going down for a while?

How can we determine what’s a fair price for a house there? Normally you look at comps, but with so many houses on the market I’m afraid the prices will keep falling and we could find that similar houses to the one we buy sell for less in the coming months and years, which I’d like to avoid.

Once we find some houses that we like, I’m thinking we should figure out what is the lowest price per square foot that a comparable house is listed for/ or has sold for very recently, and offer slightly below that. Does it make any sense to do that?

What’s the best way to find/select a realtor there?

On financing - what’s the best way to find the best mortgage rate? And at a place that will be easy to work with and quick? Our current mortgage is with our Credit Union, which is a very good one, and we’re very happy with it, but I’d like to get the best rate. I know Dave Donhoff is a big fan of ARMs, but we’ve only had 30 year fixed mortgages (and I guess paid money we could’ve saved) but I’m wary of uncertainties in general, and especially where money is concerned. Dave or others - with the info I’ve given what is your advice on the type of mortgage to get? When we do sell our current home, should we conservatively invest/save the money we get versus paying off the mortgage on the new beach home?

Thanks in advance for any and all advice. And sorry this is so long.

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