Navigating Homebuying Risks Near Retirement
Older buyers are driving housing demand, but financing, timing and long-term costs can complicate decisions, making careful planning key before buying or selling.
NEW YORK — Retirement might affect more than your work life. Many older Americans choose to move, hoping to downsize, be closer to family or simply to seek out new adventures.
Realty experts say about one-sixth of all homebuyers are over the age of 50. The trend has opened new opportunities in the real estate market as some agents now specialize in serving this expanding demographic. But there are inherent risks involved for older sellers and buyers.
Various laws prohibit age-based discrimination, and there is no upper age limit for applying for a mortgage. Still, you’ll need to check that your savings and retirement income will cover expenses once you transition out of the workforce. Talk to a financial planner or trusted lender first.
Timing is critical, since lenders typically don’t qualify applicants whose sole income is from IRAs, 401(k)s, or similar distributions – especially since withdrawing from these accounts usually involves penalties.
Consider seeking a senior real estate specialist, as designated by the National Association of Realtors®. They get additional training to assist in the sometimes more complicated decision-making and financial planning involved with purchasing a home later in life. Their expertise includes tax implications, estate planning, and various benefit programs designed to support seniors who are making these transactions. They may recommend properties that are conveniently located near essential amenities like senior centers, medical facilities and other community services.
Before proceeding with a purchase, consider your particular stage in life. Not every property may be appropriate for seniors. Educate yourself on the lending options available for older homebuyers in your area with the assistance of a trustworthy lender or real estate professional. Once you secure a pre-approval, your home search should be tailored to meet your specific needs. For instance, the property should ideally demonstrate the potential for quick appreciation, since you might not complete a 30-year mortgage term. For those considering a condominium, keep in mind that ownership typically comes with additional association fees and they will affect your monthly expenses. Finally, it’s smart to require that all potential showings are move-in ready, requiring minimal or no repairs.
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