November 15, 2016
Why to Buy a Retirement Home While Still Working
If you are planning to retire in the coming years, there are some very good reasons to consider buying your retirement property in advance of this event. Especially if you are planning to take on a mortgage, there are some important advantages that you should keep in mind—not least of which are today’s incredibly low interest rates.
1. Better for Getting a Mortgage
Your income plays an important role in your mortgage application. When lenders look at mortgage applications, they pay careful attention to your debt-to-income ratio or DTI.DTI is a calculation of your monthly debt payments divided by your gross monthly income.
Lenders look for specific ratio outcomes, and those ratios will be more favorable if you are still working. Consequently, qualifying for a mortgage is easier while you continue to earn that regular income. Also, if you wait until you retire to apply for a mortgage, there is a risk that you will limit the loan amount for which you qualify.
2. Better for Getting Ahead on Your Mortgage
You want to enter retirement as debt-free as possible, which is a primary reason why many retirees opt to rent instead of buy their retirement homes. But for many retirees, it also makes more financial sense to buy rather than rent, for the equity and to protect against this country’s rising rents, among the major reasons.
By buying your retirement property before retiring, you can get ahead in paying down your mortgage debt. Before you retire, you will be in a much stronger position to accelerate mortgage payments—something less likely when you are living on a fixed budget.
3. It Makes for Easier Planning for the Long Run
Perhaps the biggest challenge for retirees is to understand and predict their living expenses. This can be especially tough when there are big variables to consider, like housing. Purchasing your retirement home sooner will give you a much better idea of the monthly expenses that you will face in retirement.
4. It Can Give You an Additional Income Stream
Most people can afford only one house, which makes sense, given the expense. But for those people fortunate enough to be able to carry two mortgages, you can buy your retirement home and rent it until you are ready to make the move. Renting the property will give you another income stream and move you closer to retirement.
5. It Will Be Easier to Afford Home Renovations
Updates and modifications to a current home are much easier to afford on a regular income—especially if there are unpleasant discoveries or new opportunities.
Of course, if you plan to buy a new home, especially a new home in a retirement community, you will not have to worry about this last problem. That is another good reason to visit Delaware and check out our retirement communities, which offer many wonderful advantages to our homeowners, both working and retired.