Don’t Make These Mistakes with Your Retirement Home
Filed under: Retirement
For most people, a house is the biggest purchase they will ever make. Even a modest home will cost you hundreds of thousands of dollars over the life of the mortgage, and many people spend a million dollars or more on their real estate purchases. So no matter who you are, we’re talking about a significant chunk of your life’s earnings, and a decision that will affect your finances for years. That’s why you want to be careful not to make any of these common home purchase mistakes.
Basing your decision on emotion. It’s important to analyze your priorities and set a budget before you go house shopping. Ask yourself how long you plan to live in the home, and how much space you really need. If you’re getting ready to retire, these questions are especially important. Remember that your budget may be changing drastically in a few years, and that you can’t predict how easy it will be to sell the home if you get in over your head.
Making these decisions ahead of time will help you keep a clear head when a pricey home tugs on your heartstrings.
Forgetting to shop around for a loan. It can be tempting to accept an adjustable-rate mortgage with very low payments, but what will happen if the interest rate jumps up too high in the future? You could be left scrambling to sell a home you can no longer afford – or worse, suffering through a foreclosure. In most cases it is best to take on a fixed-rate mortgage that you can truly afford.
Neglecting your credit score. If you’re thinking about retiring soon, you may not be watching your credit score as closely as you did in the past. After all, you don’t plan to take on a lot of debt in retirement. But if you’re thinking about moving to a new home in retirement, you still need to keep an eye on your credit score. If it falls too low, you could end up paying a higher interest rate on your mortgage – and this mistake could amount to thousands of dollars.
Overlooking the home inspection. This probably isn’t your first home purchase, so you may feel like you’ve learned enough about real estate in your lifetime that you can trust your own judgment. But a home inspector can find problems with a house that you might never notice. Since you don’t want to face major home repairs on a retirement budget, don’t skip the home inspection.