Perhaps you thought you’d be settled into a paid-off home by the time you retired, but the truth is, many adults choose to buy a new home in their senior years. Whether purchasing your first home, downsizing to a smaller dwelling, or shopping for a home suited to aging in place, buying a house as a senior requires some special considerations. This guide will help you make a smart purchase that serves you for years to come.
Searching for a Home
Unless you plan to move again, you need a home that’s just as livable in 30 years as it is today. That means you must account for the ways your health and mobility will change with age. Even if you’re in great health now, be conservative and purchase a home you can live in even if you become disabled. If you unexpectedly become injured or seriously ill and you don’t have a safe place to live, you’re likely to end up in a nursing home.
A home that’s suitable for aging in place should have a master bedroom and bathroom on the first floor, with an exception for homes with elevators. There should be parking near a main entrance with no stairs between the parking space and the front door. Ample natural lighting is ideal, as are hard floors and low-pile carpeting. Plush floors pose trip and fall hazards to seniors with mobility challenges.
While it’s tempting to move to a more rural location to save on housing, consider that you may lose the ability to drive in old age. By opting for a centrally located home instead, you can walk and take public transit if you’re unable to drive, which can reduce the likelihood of social isolation.
It’s true that centrally located homes tend to be more expensive. Do your research so you understand average prices in your area and what you can afford. In the town of Lutz, Florida, the average sale price for a home is $280,000. However, buying in the heart of town doesn’t have to mean exceeding your budget. For a more affordable home, look into smaller houses as well as condos and townhomes. Not only is a downsized home more affordable, it’s also easier to upkeep as you age.
Financing a Home
If you’re selling a house and downsizing, you may be able to use the proceeds of your home sale to purchase a new home or put a large down payment on a home. However, that’s not possible — or the best option — for all seniors.
As the New York Times explains, “An increasing number of older Americans prefer to have a mortgage. They may have the means to buy with cash but choose instead to take advantage of prevailing low interest rates and tax breaks, while freeing up their savings for other uses.”
If you do apply for a mortgage, know you’ll need the stable monthly income to back it up. Social Security payments, pensions and investments can count toward your income. If you’ll have adult children or other family cohabiting with you, you can include their income when qualifying for a HomeReady mortgage with Fannie Mae.
If leaving a home to your children isn’t a priority, consider a reverse mortgage for purchase, or HECM. This program lets older adults purchase a home without monthly mortgage payments, but it requires a sizable down payment. Kiplinger explains the HECM program in detail.
Many seniors feel that purchasing a home late in life is more complicated than when they were younger. Thankfully, there are professionals trained specifically to assist senior homebuyers. For help finding a home, seek a real estate agent who specializes in working with seniors. You should also seek a mortgage originator experienced with mortgage programs like HECM and the mortgage approval process for seniors on a fixed income.
Doing your own research before buying a home is important. However, seniors shouldn’t underestimate the value of hiring the right experts to help them find and finance a home. Once you know what you want in your future home, reach out for help navigating this often-confusing process.
This post was written by our guest author Hazel Bridges of AgingWellness.org Ms. Bridges is the creator of AgingWellness.org, which aims to provide health and wellness resources for aging seniors.
Most Americans largest debt payment on a month to month basis is their mortgage. While it’s a large portion of their debt very few people have their mortgage reviewed on an annual basis by a mortgage professional. Roughly 56% of the country has a mortgage currently and most utilize fixed rates for 30 and 15 year terms.
Since there are several reasons a homeowner may choose to refinance, let’s look at 5 of the best reasons.
1. Restructure your existing mortgage.
Some people aren’t very pleased with their existing mortgage or mortgage servicer. In 2017 mortgage servicer satisfaction fell slightly. Restructuring your mortgage through a new company can not only reset your terms but can also get you out of an unhappy relationship with your current lender or servicing company.
2. Your credit score has improved since your purchase.
According to credit.com the average credit score of American’s in 2016 was a 673. Prime credit for a mortgage is considered to be 740 or higher. A 50 to 100 point difference can mean a difference of thousands of dollars over the life of a mortgage. With buyers being more credit conscious and great tools like Credit Karma and monitoring services offered it’s not difficult to see where your scores can improve and make those changes. If your credit has drastically improved since you’ve obtained your mortgage you are the perfect candidate for a refinance.
3. Home improvements are on the horizon.
If you’ve owned your home for a year or two and have built up equity you have a great opportunity to utilize that equity to improve your home. With interest rates still very low in relation to the past, more homeowners are utilizing refinances as a means to fund their home improvements. Nerdwallet notes that while a HELOC or home equity line of credit can be okay for small improvements you can potentially save a large chunk of money by utilizing a cash out refinance.
4. Lower your interest rate.
Depending on when you initially bought your home your rate could substantially decrease through a refinance saving you thousands over the life of your mortgage. With rates holding fairly steady right now at almost all time lows and an increase on the horizon due to the recent decision by the Fed now is an incredibly good time to refi and lock in a lower loan rate for the long haul. We often find a large amount of savings for buyers looking to refinance.
5. Remove your private mortgage insurance.
Unless you put 20% down on your existing home you likely have a PMI or private mortgage insurance amount included in your monthly mortgage payment. Normally to remove your PMI you need to have at least 20 percent equity in your home. Once a conventional loan is paid to 80% of the home’s value you may request that the PMI be removed. When the balance drops to 78 percent, the mortgage servicer is required to remove the PMI. FHA mortgages are not included in this scenario. Interest rates are set to rise again in 2018 so now is a great time to refinance and remove your PMI while locking in potential savings over the life of the loan.
Get in touch with us today to discuss your refinance and we’ll be happy to help! Call 813-302-1616 or contact us to get started.
Buying your first home can seem like a daunting task. It doesn’t have to be.
Spring is historically the busiest season for home purchases around the nation. In Florida, real estate purchases and mortgage applications especially increase while home buyers look to move or purchase before the summer heat hits. We already have some great info on our website regarding mortgage specific basics and a great guide on the home buying process. In this article though We’re going to focus on 5 simple steps you can take to improve your home buying process.
1. Get your finances in order with a well thought out budget
Throughout your mortgage qualification we’ll take into account not only what you can afford but what you actually want to spend. Many big box lenders will automatically max out your pre-qualification to get the most money out of you. It’s important to take a few moments and go through your finances to figure out what you want to pay monthly for your new home expense.
At The Orlicki Group we believe that staying within your budget is important to you enjoying your new home. We’ll talk with you about what you would like to spend and what your plans are for your down payment to get you a pre-qualification that meets your needs.
2. Gather all your paperwork
You know that big pile of taxes, bills, pay stubs, and paperwork you’ve been neglecting? Now is the time to get that in order. During the documentation of your mortgage we’re going to need a few things that you can prep to make your mortgage that much easier. Here’s a few things we’re going to ask for:
- Two Years of tax returns (all pages and schedules)
- Two years of W2 / 1099
- Clear color copies of your Driver’s License and Social Security Card
- 2 months of Bank records for all accounts
- Two most recent pay stubs
There may be more that we’ll need but that’s a great place to start. Scanning everything in and digitizing it is the best way to prepare your documents. Most of your bank records and pay stubs are available online for download. If you use Turbo Tax or another online tax filing system you can download all your pertinent documents after you log in to your account. Don’t forget that we will need ALL the pages of your docs. Yes even the blank ones. We’ll guide you through every step of the process though so don’t worry. It’s easier than it sounds.
3. Examine your credit report
During your mortgage process we’ll thoroughly review your credit report. It’s nice to know what’s coming down the pipe though. If you haven’t taken advantage within the past year now is a great time to review your annual credit report from Equifax, Experian and Trans Union. The FTC suggests that you review your credit report prior to any major purchase, like a mortgage. In a recent study the FTC noted that 1 in 5 Americans has errors on their credit report.
Another great reason to check your report annually is to safe guard yourself from identity theft. According to Credit.com
When you decide to pull your credit report the only site you should be pulling from is FreeCreditReport.com. This is the only site verified and authorized by the FTC.
“2016 will be remembered as a banner year for fraudsters, as numerous measures of identity fraud reached new heights.” Fraud losses totaled $16 billion, the report found. About 1 in every 16 U.S. adults were victims of ID theft last year (6.15%) — and the incidence rate jumped some 16% year over year.”
Taking simple steps such as reviewing your credit report annually can
4. Slim down your baggage
Never will it be more apparent than when you are getting ready to move that you have entirely too much stuff. There’s a few ways that you can look at slimming down your belongings when moving into your new home. One simple trick is to get a large storage bin and start putting things in it as you go. See things you don’t use or have been meaning to get rid of? In the bin they go. Once the bin is full, mark that for donation and start again. You can also start by organizing your existing home regularly. Put that messy closet in order. Slim down your wardrobe.
The idea is that you want to move as little as possible into your new home to make way for things that you might need and limit the size of the moving truck or number of trips you will need to make.
5. Work with a reputable mortgage professional
Last but certainly not least you’re going to want to get pre-approved with a reputable mortgage professional. The Orlicki Group is a team of professionals with a very personal touch. Oliver has almost 200 5 Star Zillow reviews.
We can get you pre-approved and guide you through the mortgage process with ease. Don’t suffer through a disconnect with a big bank or think that a space ship mortgage on your phone is the way to go.
We’re always here to answer your mortgage questions and assist you with your needs. Working with first time home buyers is one of our favorite aspects of the mortgage business. Call us today at 813-302-1616 or CONTACT US to get started.
Mortgage rates can seemingly do no wrong this week. They fell again today–this time making it firmly into territory not seen since late April. At current levels, many lenders have moved on to quoting conventional 30yr mortgage rates well below what I was able to give most of my past clients.
Today’s improvements, and indeed some of the improvements earlier this week have NOT been captured by Freddie Mac’s weekly Primary Mortgage Market Survey–the industry standard for mortgage rate tracking. While the survey is highly accurate over the long haul, its methodology doesn’t allow it to capture all of the movement in any given week. In fact, the only rate sheets that inform the survey response are those that come out on Friday afternoon through Wednesday morning. Moreover, the survey responses tend to arrive more toward the beginning of the week. That means if things are moving fairly quickly over the course of the week, Freddie’s survey will be a bit behind the curve.
There’s nothing good or bad about the lag in the Freddie Mac data. It’s a valuable resource that just happens to be a bit too ‘wide-angle’ for the average borrower or originator seeking the most up-to-date information on rates. I only bring it up because almost every major news outlet relies on the Freddie report for its official weekly article on mortgage rates. Today, those articles will be saying there hasn’t been much of an improvement over last week, and it’s important you know that’s no longer the case.
This is a timely piece of information as well, because tomorrow brings the important Employment Situationreport (aka “jobs report, nonfarm payrolls, or NFP”). This is the biggest piece of economic data that comes out each month and it has the greatest potential to cause movement in the bond markets that dictate mortgage rates. With rates at 5-month lows and even a 50% risk of a big bounce higher, it’s even harder to make a caseagainst locking today. Granted, risk-takers could be rewarded if the report is exceptionally weak, but even then, we have to consider that rates can sometimes bounce higher simply because they’ve gotten tired of moving consistently lower. We’re not quite to the point where that’s an imminent risk regardless of the data, but certainly, an equivocal jobs report wouldn’t make any strong arguments for rates to continue lower.