U.S. News: 5 Home Buying Decisions Retirees Must Consider

For people of all life stages, moving from one place to another is an important decision. And for retirees, buying a new home in retirement comes with its own unique set of challenges.

Downsizing to a less expensive residence during retirement can be one way to free-up cash and improve finances, however, retirees should carefully crunch the numbers on moving costs, fees and taxes, before deciding if a smaller home is the right move for them, according to U.S. News & World Report.

Before packing up the house and relocating, retirees should consider how a monthly mortgage payment might affect their retirement budget, including their monthly cash flow, says the U.S. News article, which outlines five key considerations retirees should think about before buying a home in retirement.

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“Many homeowners rely on a 30-year mortgage, which often has low payments,” U.S. News writes. “But that means you could be on the hook for monthly payments for the majority of your retirement years.”

The article also encourages retirees to aim for a mortgage payment that won’t hinder their abilities to pay for their other retirement wants and needs, while also prompting retirees to consider their additional housing costs and their ability to quality for a mortgage during retirement.

Read more at U.S. News & World Report.

Written by Jason Oliva

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  • Wow, this article opens the door to talk about the HECM for purchase loan, doesn’t it?

    Yes, moving and down sizing is a major decision to make for seniors who recognize this is their only solution to the problems they are having. And I agree with the article as far as the expenses of moving, they can be over whelming taking everything into consideration.
    However, there are solutions to eliminate many of these burdens. Those retiring and are 62 years of age and older can down size and not have a mortgage payment as you all know, they can get a reverse mortgage!

    Sure, we all know that in order to do take out a H4P loan, seniors must have the amount of cash to make up the difference between the purchase price/appraised value and the amount of proceeds that will come from the HECM. If this is the position are seniors are in, this is the solution the article did not mention. Now let us look at a different scenario?

    My wife and I have close friends that own their own home, which is fairly large in size but they love the home. They have thought of down sizing but they really want to stay put. My friends still have a mortgage, not that large but still have one.

    They made a decision to go for a HECM, they paid off there existing lien and up-dated their home, they had enough left to stay within the 60% limitation for the first year and still had enough to pay off their automobile. The following year the balance that is left and still coming to them, they are planning to keep in a line of credit until needed.

    This scenario was the perfect fit for our friends. Yet, the other couple achieved their goals by down sizing and still wound up with no monthly mortgage payment as the article alludes to! Great deal in both incidents!

    John A. Smaldone
    http://www.hanover-financial.com

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