When most people reach retirement, they decide to downsize or relocate. By doing this, you may see an improvement in your finances. However, you should take the time to do your due diligence to find the best option for you when buying a house in retirement. This includes taking a closer look at the numbers: moving costs, fees, taxes, etc.
If you’ve reached retirement and you want to move to Central Florida, contact Solivita Living. They are a real estate agency that specializes in 55+ communities located around Kissimmee, FL. Their communities have a lot of amenities to offer, so you can stay active even in retirement.
In this article, we’ll offer 5 tips for buying a house in retirement.
5 Tips for Buying a House in Retirement
Below, we’ll take a look at 5 things you should consider when thinking about buying a house in retirement.
1. Determine How A Mortgage Payment Will Affect Your Budget
Most people who are retired have very limited cash flow. Therefore, it’s important to consider how a mortgage payment will fit into your budget. Many homeowners opt for a 30-year mortgage because the payments are lower, but this also means you could be stuck paying on a mortgage for the rest of your life.
Also, consider how your monthly expenses will be affected by buying a new house in retirement. For example, if you currently have an expensive apartment in the city and you’re moving to the suburbs, your payments should decrease. Your goal should be to find a mortgage that’s not going to keep you from funding your other needs/wants in retirement.
2. Consider Additional Costs
In most cases, owning your home is much cheaper than renting. However, this may not be true in all areas. There are usually some additional expenses associated with homeownership, some of which catch you off guard. The costs of these issues may cut into your savings. If your retirement budget is so tight that you won’t be able to afford last-minute repairs, you may want to avoid buying an older home.
3. Find Out If You Qualify For A Mortgage
Under federal law, lenders are not allowed to refuse your loan application due to your age- but they will pull your credit score and consider your income sources to determine if you qualify for a mortgage loan.
Income typically drastically decreases for retirees. This means that a mortgage you could have easily paid 10 years ago may not be accessible once you retire. Therefore, sit down and discuss your situation and your wants/needs before you apply for a mortgage or go online and put your numbers through a mortgage calculator to see if you may qualify for a mortgage.
4. Compare Renting vs. Buying
Most Americans would love to own their own home at some point in their lives. After all, most people believe that homeownership is cheaper than renting. However, this isn’t necessarily the case. When you rent, you pay a monthly fee that will never go away- but you are not liable for repairs and basic maintenance. Plus, you don’t have to worry about homeowner’s insurance or property taxes. Therefore, if you know that you’re going to end up having to pay a mortgage for most of your retirement, you may want to consider renting instead.
That being said, renters may face unpredictable increases in rent every time their lease comes up for renewal. Plus, retirees who opt to rent may be asked to move, forced to find a new place to live.
5. Find Out What Mortgage Terms You Can Truly Afford
If you opt toward buying a house in retirement, you will need to consider what terms you can afford. If you can do a 10- or 15-year mortgage, it may save money in the long run. You will have to pay more upfront, but you may be able to find a part-time job at the beginning of your retirement to offset those costs. Then, once the loan is paid off, you don’t have to worry about that money coming out of your savings every month.
While it’s true that buying a house in retirement may allow you to be closer to your family or to move to the place you’ve always dreamed of, you need to consider these things before making that leap. If you’re relocating to Central Florida, consider working with Solivita Living. They are a real estate agency specializing in 55+ communities. They have a wide variety of amenities that you will enjoy and will help you stay active and meet new friends.