Real estate is not only a great investment for retired couples to develop a passive income, but also an important way to ensure financial stability in your golden years. Investing in real estate can help you secure a stress-free living situation for the rest of your life.
But, it’s important to do your research before you to take the leap. To help, The Degnan Group is here to share five things retired couples MUST consider before buying property.
1. Your Timeline
Do you want to pay a 15-year or 30-year mortgage? Both options come with pros and cons.
With a 15-year mortgage plan, you’ll pay more money upfront but reap the benefits later. In 15 short years, you can breathe a sigh of relief with full equity in your home. On the other hand, a 30-year mortgage is more affordable and allows for lower monthly payments.
Carefully evaluate your income, your financial goals, and your vision for the future before you decide which mortgage term is right for you.
2. Your Income
After a lifetime of hard work, it’s finally time to relax and settle down for good. Before buying a property for retirement, though, you must take a close look at your income.
Will you and your spouse live on a fixed income? Will you be able to afford your mortgage payments after budgeting for all of your other needs? Can you work part-time at the start of your retirement to supplement your savings? Do you have a comfortable emergency fund to cover unexpected costs?
The Washington Post reports that “Data from the Consumer Bankruptcy Project show that bankruptcy filings by people 65 and older are climbing.” To ensure a secure financial future, you should have clear answers to all of these questions before you buy property for your retirement.
3. Your Needs
It can be a shock to the system to think about your own wants and needs after years of putting your family first.
Weigh the pros and cons of renting vs. homeownership carefully before you make a decision. It’s also important to think about the amount of space you need now and in the future because downsizing can save you a lot of money in the long run. Buying a home for retirement can make for smooth sailing into your golden years, but only if you do it right.
4. Expectation vs. Reality
It’s normal to fantasize about your retirement and moving to that beach house, condo, or vacation destination you’ve always dreamed of. There’s nothing wrong with moving somewhere new, but before you invest in a house make sure to test the location thoroughly.
What you expect and what you get can sometimes be very different things, and you don’t want to discover problems with the location after you’ve signed all the paperwork to close on your home. If you can, test it out. Vacation there, form connections, research the nearby healthcare options and build a social network before you pick up and move.
Ensure you won’t have to move again (or multiple times) by choosing an area you’ll be able to navigate even as you transition into retirement.
Grocery stores, pharmacies, and other essentials should be nearby, and staying near family and friends can simplify get-togethers in the future. The home should also be a single story and have minimal outdoor space so you can maintain it in the years to come.
5. Additional Costs
Last but not least on the list of five things retired couples must consider before buying property is the additional costs that homeownership can incur.
An organized budget should be part of anyone’s purchasing process, but for retired couples, it’s even more important. Your income will likely decrease over time, so the best way to ensure a happy retirement is by taking all extra costs into consideration.
Look at the average increase in property tax in your area to estimate what you will be paying 10, 20, and 30 years from now. Have the home thoroughly inspected and set money aside monthly for maintenance emergencies that may pop up. Finally, take into account any additional fees like monthly payments to a Homeowner’s Association, insurance costs, and more.
Ensure a Successful Retirement With These 5 Tips
Buying property for retirement is a big investment. Before you make a decision, there is a lot to consider and discuss with your loved ones.
Think about your timeline and whether you want a 15-year mortgage or a 30-year mortgage. Plan for the coming changes in your future income and buy a home that suits your needs. In addition, choose your location carefully and account for any extra costs that can (and will) pop up with homeownership.
If you keep these five tips in mind, you can secure an enjoyable retirement in a property you love. Call The Degnan Group today and let us help you find your lifetime home!