A Guide to Buying a Home for Older Adults

Retirement


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.

Finding Help

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.

Photo by Matthew Bennett on Unsplash

Four Possible Reasons To Refinance

A mortgage is generally the largest debt most homeowners have to manage.  It’s a good idea to give your personal real estate finance portfolio a check-up at least once a year.

Since there are many reasons a homeowner may choose to refinance, we’ll take a look at the four most common.

1.  Mortgage Rates Drop:

Typically, the most common reason that homeowners refinance their mortgage is to secure a lower interest rate. Interest rate and loan amount determines the total cost that a borrower will pay. The lower the interest rate, the less the overall cost will be. Interest is calculated on a daily basis and usually paid back to the lender on a monthly basis.

2.  Lower Payments:

Lowering a mortgage payment can be achieved by lowering the mortgage rate, lengthening the loan term, combining two or more loans or removing mortgage insurance.

3.  New Mortgage Program:

Refinancing an Adjustable Rate Mortgage (ARM) to a new Fixed Rate Mortgage (FRM), combining a first and second mortgage or paying off a balloon loan are three possible reasons to explore a refinance.

4.  Debt Consolidation:

If there is sufficient equity, sometimes paying off consumer debt by combining all debts into one lower monthly mortgage payment can significantly reduce the short-term deficits in a budget.  However, it’s important to keep in mind the total cost of that debt by adding it into a 30 year mortgage payment.

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Frequently Asked Refinance Questions:

Q:  Do I have to refinance with my current mortgage company?

No, you may choose any company to refinance your mortgage since the new loan will replace the existing mortgage.

Q:  Is it easier to refinance with my current mortgage company?

It is possible your current mortgage company may require less documentation, but this could add additional cost or a higher interest rate. Do your homework and shop around to make sure you’re getting the best deal.

Q:  Will I automatically qualify if I’ve never made any late payments?

No, you will have to qualify for your new refinance. However, certain programs will allow for reduced documentation like a FHA to FHA Streamline Refinance.

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