Top 5 Reasons To Buy Your Retirement Home Before You Retire
It’s mid-winter with piles of snow everywhere, this is the perfect time to think of your future and retirement. Right now is the best time ever for boomers and others to buy that vacation / retirement home at a bargain price and with a low mortgage rate. Buying the home while you’re still working full-time is easier, particularly if you plan to get a mortgage. Not convinced? Check out these top 5 reasons you should buy your retirement home before you retire:
1. It’s easier to get a mortgage.
Your debt-to-income ratio will be lower and more favorable which will make it easier for you to qualify for a loan with your mortgage lender. You can also qualify for a larger loan if you apply while you’re still fully employed.
2. You have more cash for renovations or major repairs.
If you decide to make renovations or you discover a major problem with the home that requires repairs, you’ll be grateful that you still have a regular paycheck and cash flow from your full-time job.
3. Start paying off your mortgage.
Get out of debt faster by starting to pay the mortgage off on your retirement home sooner than later.
4. Improve your long-term budget planning.
It might seem difficult to gauge how much you should budget in retirement for your housing expenses; however, if you buy the home now, you’ll have a more realistic idea that you can use to plan your savings and retirement with.
5. Expand your portfolio.
If you can afford to pay two mortgages, you might benefit from purchasing your retirement home now and renting it out for a few years prior to moving in. Renting the home can also help you retire sooner since its generating extra income.
Stop daydreaming about the second home and start making it a reality.
For most of us in the Northeast who have lived through decades of cold winters retirement will mean moving south to a warmer climate. While many prefer stand-alone residences, there are also unlimited selections of condominiums and planning communities to choose from. Many who start with a condo purchase may choose to upgrade to a home in retirement. Buying a second home is a big decision. Here’s how to tell if you’re ready for another home, and how to prepare if a second home is in the cards for you and your family.
1. Determine if you can afford a second home
Before you get your heart set on any one property, assess your situation and look beyond the cost of a second mortgage alone. Can you afford insurance, property taxes, and ongoing costs when you’re not around? Water, electric, gas, and trash removal bills never stop, even when you’re away.
2. Decide on a location
Florida and the Carolina’s alone have everything from beachfront homes to small rural communities to choose from. Vacation for 4-5 days a time in various regions before you decide on a good location for you and your family. Once you find a region or community you like, spend a few weeks there to get a good feel for the area. Set up some appointments with a local Real Estate professional who will continue to send you property information on new listings.
3. Investigate insuring a second home
Once you have an idea of the true costs involved with owning a second home, and you know the general area you hope to buy in, a chat with your insurance company comes next. Start the second-home conversation with your current insurer, where you already have a relationship. If you use them for both of your properties and car(s), you may qualify for a better rate.
4. Plan Your Expense Budget
After you’ve budgeted all possible expenses for a second home and you’ve identified potential neighborhoods and found a broker to work with its now important to set up a budget. Having a second home has many significant advantages including the investment potential if you buy at the right time. And if your newly purchased second home is in a desirable area, you may benefit financially in the long term even if you choose not to rent out your property. Depending on how your second home is used, you’ll probably also qualify for some tax benefits.
A vacation home should be a refuge. Use your second home as a space to unplug, relax, and spend time with those you care for, in an area you love.