Yahoo Finance 3 Things You Must Do If You’re Buying a Home in Retirement
Anyone facing retirement has some decisions to make, not the least of which is where to live. While some retirees remain in their pre-retirement homes, others look to downsize, and some even trade up to larger homes to accommodate visiting family and friends.
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If your retirement plans include buying a home, here are three things you must do.
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Consider Lifestyle
Retirement planning is a very personal matter, and while financial considerations are important, so is personal fulfillment.
“Think about the lifestyle you want to enjoy during retirement so you have a better idea about the type of housing you need,” the Chase Education Center blog advises. For example, a frequent traveler might opt for a condo to avoid having to worry about yard maintenance, while an avid gardener might want a home with a big yard and plenty of space for garden beds.
Location matters, too. Retirement communities and urban areas often appeal to retirees who prefer activity-packed schedules. Those who relish peace and quiet might be happier in a more rural setting.
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Get Your Finances in Order
Once you’ve decided the kind of lifestyle you want and where you want to live in retirement, it’s time to look at your finances.
You’re probably already thinking about needing to show proof of a steady income if you’ll finance your home purchase. But steady income doesn’t have to come from employment. Lenders also accept Social Security benefits, 401(k) distributions, pensions, investments and other liquid assets as sources of steady, predictable income.
“You will also need good credit, a low debt-to-income ratio and will most likely need to make a downpayment of some sort,” according to Mortgage Solutions Financial.
The equity in your current home could cover your down payment and then some if you sell your current home to buy the new one. Consider ordering an appraisal to find out your home’s market value. Your equity is the home’s value less your mortgage balance.
Think About the Future
Chances are, you’ll be living on less income in retirement than you’ve enjoyed while working. Creating a budget that includes maintenance, taxes, HOA fees and insurance will help you make realistic decisions about what you can afford.
If you’ll be retiring to a state like Florida, where insurance costs are soaring, budgeting for high current rates and future increases is even more important. “As a retiree, you’ll want to protect your home and belongings adequately, but premiums can add up,” according to Compass Mortgage.
One final consideration when buying a home in retirement is your future healthcare needs. You’ll want access to quality medical facilities and healthcare providers. And you’ll want the home you purchase to be accessible — or easy to make accessible — to increase the chance that you’ll be able to comfortably age in place if your health declines.
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This article originally appeared on GOBankingRates.com: 3 Things You Must Do If You’re Buying a Home in Retirement
