Retirement can mean a lot of changes, one of which may be a new home. But it may be nerve-wracking to make such a large investment right before losing an income.
However, every situation is different and buying a home might be right for you. Check out the scenarios in which buying a home is okay before retirement.
Equity
If you have leftover equity from your current home, use it on your new property! If you’ve been in your house for a while, you probably have substantial equity. If you use it on your new home, you will have much less to borrow. If the house you’re moving into has the same value as your current home, you might not even have to borrow anything at all.
Extra income
It’s no secret that retirement is expensive. While some may have a 401K or social security to offset the costs, it’s never a bad idea to have some additional income. Renting is a great way to make some extra cash. It doesn’t have to necessarily take the form of buying and renting out an entire property but renting out a room or garage of a property.
More years to work
If you have 5 years or more before you retire, you likely will be able to earn a lot of money to put towards a mortgage. If you’re towards retirement, your salary is likely the highest it will be, so start saving!
Downsize
If your kids have moved out, you might be looking to downsize. This will decrease your expenses each month. And, if your equity is good enough, you won’t even need a mortgage!
Longevity
How long do you think you’ll spend in a new home? Do you plan to spend a lot of your retirement traveling? Is it worth it?
Posterity
If you have people to pass the house on to, the investment is worth it. Renting is certainly not as cost-effective.
Source: National Debt Relief