5 Reasons To Buy Your Retirement Home Early
Most of us scrimp and save so that when we retire we have a nice, cozy place to live out the rest of our days in peace but did you know that it is actually a better idea to buy your retirement home early?
There are several financial benefits to buying early, here are just a few of them:
Easier mortgage approval
One of the most important aspects of your loan application is the debt-to-income ratio (DTI). This is simply your total monthly debt divided by the amount of money you make. If you have retired and no longer have much of an income coming in, this could actually hurt your loan application.
This means it is easier to be approved for a mortgage while you are still at work. It will also be easier to get approved for a higher loan amount.
More money to put towards renovations
Most houses are not perfect for us when we buy them. They all need some updating or fixing here and there and if you have retired, finding the extra money is going to be a lot harder. You won’t have nearly the amount of cash flow once you have retired so consider buying early so that you have the money you need to get the house just right.
Keep in mind, once you start working on the home you could run into problems, even finding previous problems that were simply missed. You want to have the money around to cover any of these types of issues and there is more chance of that if you are still working.
Get ahead of your mortgage
The more you are making, the higher your monthly payments can be. This means you will be able to pay off your mortgage years earlier thus saving you a ton of money in interest payments. You will not be able to get ahead of your mortgage this way if you have already retired when you buy your home.
Easier to plan for the long term
Whether you are working or not, chances are good that your mortgage payment is always going to be your biggest monthly expense. By purchasing your home before you retire you will have a good handle on just how much you need to budget for. You can then make your financial decisions accordingly.
Make your investment work for you
If you have the money to cover two mortgages it is not a bad idea to buy your retirement home now and rent it out for a few years. This can cover your mortgage payments for those years getting you way ahead of the financial game.
By renting out the home and making the extra money you could even find that you are able to retire a little early.
If you have been thinking about retirement and what you are going to do in terms of housing, keep these concepts in mind and you could end up with your retirement home much sooner than you thought.