How to Buy a Home Before Retiring
The purchase of a home has certain advantages. Homeowners can deduct interest on a mortgage from their taxes. They also can earn equity as the price of their home increases over time. A mortgage also typically allows someone to purchase a larger house than can be rented. For those on the verge of retirement, home ownership can offer similar benefits. However, other considerations may exist as well.
Other People Are Reading
Instructions
-
-
1
Sell your previous house. If you are already a homeowner, truly think about selling your first house before purchasing another one. Owning two houses at the same time can drain your finances very quickly. If you are selling in a down market but moving to a place where housing costs are lower, consider slashing the asking price for a quick sale. The opportunity to move when you wish and avoid paying bridge loans can more than make up for any costs incurred.
-
2
Consider alternative housing arrangements such as houses designed especially with the needs of seniors in mind. Such complexes may offer additional services such as accommodations for meals, special classes for older people and lawn-service maintenance.
-
-
3
Decide how to finance the new house. You may have paid off your previous house and have extra funds to put into a down payment on the new house. Consult with a financial planner to determine if you should put any profit into a new house purchase or invest it in other areas instead, such as in bonds and blue chip stocks. There may be tax advantages to either decision. Be sure to take into account differing tax laws if you are moving to a new state.
-
4
Calculate your projected income when you retire. You will likely face reductions in your income upon retirement. However, a spouse may still be working even if you are retired. You may also be faced with lower costs when you retire. You may no longer need a second car to commute. You may be able to eat more meals at home and focus on your wardrobe less. At the same time, you may face additional health care costs if you retire early and do not qualify for Medicare. Make sure you fully understand any medical coverage before you retire.
-
5
Provide for the needs of other people living in the new house. Your spouse may live longer than you do, so make sure the title to the property accounts for her needs as well as your own. Make sure that the mortgage can be paid if either one of you becomes disabled.
-
6
Consider the location of the new house very carefully. Do you need to be near the city center if you are no longer commuting there? You may want to remain close in order to take advantage of the cultural offerings that can be found in many big cities.
-
7
Work with an agent with a Senior Real Estate Specialist designation. These real estate agents specialize in working with those nearing retirement or already retired. A specialist can help make the homebuying process easier for those nearing retirement and may be familiar with local laws in an unfamiliar place. A specialist may also understand how best to help you use your housing dollars wisely.
-
1
