Should You Buy a Home Before Retiring?
Trying to decide if buying a retirement home before retiring is right for you? Or contemplating the best time to buy a retirement home? Maybe even how to buy a retirement home before retiring? These are all very valid questions as you start thing about this next stage of life. Here are a few things to consider.
Why Buy a Retirement Home Before Retiring?
Depending on what your situation is, buying a retirement home might seem like a huge endeavor. But there are a few reasons why you might be considering buying a home close to retirement.
Reason 1. You want to buy a second home
Your dream may be to keep your current home while having a second home in an area that perhaps has better weather or simply comes without all of the obligations that your current home does. To do this, you’ll want to have a really strong financial plan. And if you’re debating buying a home close to retirement instead of buying a home after retirement, this is one you’ll probably want to do before you actually retire.
Reason 2. You want to start investing in your future home
If you still plan to work for a few more years, buying a home close to retirement isn’t a terrible idea. In fact, it could be smart to buy your dream retirement home well before you plan on moving into it. By buying a retirement home early, you’ll create the opportunity to start making a dent in your mortgage. And if you rent the property out until you’re ready, you can get someone else to help make that dent for you.
Another benefit of buying a retirement home early is that you can start saving up for repairs slowly and complete them over a longer stretch of time. And if you already own the home you’re living in, you might be able to pay off your retirement home in full once you move in—without having to worry about additional repairs. Just remember to account for things that you might care more about as you age, like accessibility.
Reason 3. You don’t own a home yet
If you don’t already own a home, you might be dreading dealing with landlords and raising rents in your retirement—especially once your income becomes fixed. In this case, buying a home close to retirement might make more sense than buying a home after retirement. It’s easier to buy a home when you’re still a full-time employee.
How to Buy a Retirement Home Before Retiring
Now the question is though, how to buy a retirement home before retiring? Here are a few things you’ll want to keep in mind, while also working towards your other retirement budgeting plans.
The first thing you’ll want to do is start saving up money. The more money you can put down on a house, the better off you'll be. A strong down payment will help you get more competitive mortgage rates, which means less money that you owe every month. And low monthly mortgage payments can be extremely important for retirees after their incomes become fixed.
Build Your Credit
The older you get, the more time you have to establish your credit. But if you don’t have a mortgage yet or don’t use credit cards, you might not have thought about your credit score in a while. But it’s smart to build up your credit score if you’re thinking about buying a home close to retirement—or really, at any point that you’re considering a home mortgage. High credit scores will also give your better loan options at lower rates, which translate to lower monthly payments.
An important part of retirement budgeting is keeping your expenses low. Selecting a retirement home in an affordable area is a smart thing to do. There are plenty of states to consider that offer a reasonably low cost of living. You might also want to consider things like active adult communities. Having a sense of community could help you retire happily. Or a location that is close to your family.
Buying a home after retirement is an option, but you’re probably better off deciding how to buy a retirement home before retiring. You’ll have more options and more time to figure out the details. But overall, buying a retirement home could be a great idea if you put in the right amount of thought and consideration.
Contributed to The 55+ Society
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