Three Essential Tips for Seniors Looking to Buy a New Home - Video
Looking to Buy a New Home, Seniors? Three Essential Tips Here
More and more seniors are buying new homes these days, as aging in place is becoming more common. Seniors face greater complications in home buying than other parts of the population, and they need to be aware of potential pitfalls in the process. Here are three essential tips for seniors looking to buy a new home.
1- Be picky and choose a home that justifies the move
If you’re a senior making a big move, there’s a strong likelihood that you’re moving for a specific reason. Let this reason be your one true guide when searching for the right property. If you have a mobility issue, look for a home that will accommodate all of your needs, for example.
There’s a reason you’re buying instead of renting, so keep that in mind. Buying a home gives you more control over modification and repairs, so look for a home that you can easily modify to suit your needs. Buying a home also gives you a built-in savings account and lets you scoop up some great tax breaks. Use this knowledge to your advantage when deciding the price range for your new home.
2- Be aware of ALL of your financing options
The way you bought your home a few decades ago may not be the best way to buy your new home. It’s vital that you explore and fully understand all of your financing options before settling on the right one for you.
For seniors looking to buy a new home, the simplest option (and the one with the fewest strings) is the buy outright option. Many seniors have lived in their current homes long enough to have their mortgage fully paid off, so any proceeds from their current home sale can be used to purchase their new home outright. Most seniors buying a new home are downsizing, so the price of the new home may be significantly less than what they get for their current home. This makes this a highly attractive option.
If this isn’t an option for you, you’re going to have to get some sort of loan. For traditional mortgage loans, you will need to place a down payment and then be able to keep up with monthly mortgage payments. Beware of hidden costs. Seniors living on a fixed income may think they can manage a $1,000 monthly mortgage, for instance, but forget to factor in the cost of homeowner’s insurance, taxes, and budgets for home repairs. Don’t stretch your monthly budget so thin that you wind up struggling to pay the mortgage.
If you don’t feel comfortable with having a monthly payment hanging over your head, you can always consider purchasing your home with a reverse mortgage. You’ll need to make a significant down payment in this case, but you won’t have to make any more payments on the home until you sell the property.
3- Be aware of real estate scams
The elderly are disproportionately targeted by real estate scams, so you must have a firm grasp on what to look out for. One common scam involves an unsolicited offer on the home you’re selling or a home to purchase. The scammer may want you to put down money to “hold” the property and pressure you to make a fast decision lest you lose it. Other scams involve the actual lending process, where loan officers will pre-qualify you for exorbitant loans that are well above what you can afford. Here are some good resources on various real estate scams to watch out for.
Buying a new home can be your gateway to free, independent living in old age. Before you purchase, however, make sure you’re buying the right home for you, have exhausted all financing options before settling on one, and avoided any real estate scams that may come your way.
Author: Jim Vogel of ElderAction
NOTE FROM ROGER> A local HECM lender that I refer clients to could easily answer questions you have about the HECM for Purchase (H4P) reverse mortgage product. Browse his FAQ page from Reverse Funding here.