As you get closer to retirement age, it might feel like it's too late to buy a home. While this might be true in some cases, there are times when it still makes sense to buy.
For older homebuyers, there are some considerations that younger house hunters don't necessarily have to worry about. Of course, you still need to look at the neighborhood and school district, compare the prices for similarly sized houses in the area, and make sure you're choosing a home that's within your budget, but older homebuyers also have to face the hard fact that as they age, it's going to be more difficult to take care of a house. The closer you are to retirement age, the more important it is to look at your financial situation, your health and how this house could impact your family members.
Some say it's actually better to buy your first home when you're older because chances are you have more money in savings and investments. If you're planning a retirement that involves extensive travel, burdening yourself with a mortgage and home maintenance is probably not the best idea, but if your retirement plans include settling down in one place, it might not be such a bad idea. Just make sure you sit down and crunch the numbers. How will that down payment affect your retirement nest egg?
You don't want to saddle yourself with a monthly payment that blows through your retirement savings, either. Take a hard look at your retirement budget, and make sure you'll be able to afford maintenance as well as mortgage payments, insurance, taxes and any homeowner's association fees. Selling a home takes time, and that can be a liability if you find yourself in a situation where you need to move to an assisted-living facility. Can you afford in-home care, or can a family member take care of the house for you if this situation arises?
A home is a long-term investment, and you need to consider what's going to happen to that investment when you can't maintain it yourself anymore. Make sure you have a plan to manage maintenance when you can no longer do it yourself. That might mean paying for a maintenance service or making sure you have the cash tucked away to pay for individual issues as they arise. You might also be able to rely on some handy family members to pitch in and help.
Read on for more things to consider when buying a home later in life.
Homebuying Planning Tips
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Buying Later In Life
If your finances are looking good and your family is comfortable enough with your decision, buying a home later in life can be a good investment. Before you head to your closing, it's a good idea to sit down with your family and talk about your long-term plans for this house. How long are you thinking about living there? Are you planning to sell it eventually, or are you planning to leave the home to one of your children?
Even if you're not planning to stay in this house for the rest of your life, as you age, it's more important than ever to think about unforeseen medical issues that could put you in a position where you're unable to care for your home. While it's not an easy conversation to have, you should absolutely sit down with your family and talk about what this home will mean for them if you fall ill or after you're gone. Your children will be better off if you've discussed details up front, such as who will care for the house if you're not able and even who would inherit the house.
Before sitting down to talk with your family, think about what you want and how you'd like the conversation to go. While you can't fully control what will happen, planning ahead can help you all talk about this difficult topic a little bit more smoothly. If you don't feel that you can discuss this kind of thing with your family, you might want to reconsider purchasing the home.
You don't want your decision to become a burden on them down the road, so it's a good idea to get everything out in the open and make sure your family is on board. With some good communication and planning, this home can be more than a good investment for you -- it can also be an investment in their future.
For more information on buying a home, check out the links on the next page.
- Hatfield, Rob and Jane Riffe. "Talking About Money with the Grownups in Your Family." West Virginia University Extension Service. 2010. (Feb. 17, 2011)http://fh.ext.wvu.edu/r/download/84572
- Milevsky, Moshe. "Many homeowners should have rented." The Globe and Mail. Aug. 5, 2010. (Feb. 10, 2011)http://www.theglobeandmail.com/globe-investor/personal-finance/many-homeowners-should-have-rented/article1518767/page4/
- Weston, Liz Pulliam. "Don't bite off too much house." MSN Money. Nov. 18, 2009. (Feb. 10, 2011)http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/Don'tBiteOffTooMuchHouse.aspx