Retirement is an exciting time filled with new opportunities; and for many, it’s the perfect chance to find a home that suits their changing needs. 

However, purchasing a house after retiring requires careful planning and consideration. 

To ensure you make a financially sound decision, evaluating your unique situation and weighing the various factors involved in the home-buying process is essential.

Assess your financial situation

Start by reviewing your retirement savings, including:

• Pension plans
• 401(k)s
• IRAs,
• Any other investments you’ve made over the years 

Evaluate your monthly income streams, such as:

• Social Security benefits
• Rental income
• Dividends from stocks and bonds

Next, assess your current expenses and project how they may change in retirement. 

• Healthcare costs can be a significant expense for you as a retiree, so be sure to factor in any expected care costs. 
• Consider any outstanding debts, such as credit card balances or car payments, and determine how they fit into your financial picture.
• Check your credit report and score to ensure no surprises could hinder your ability to secure favorable loan terms. 

If necessary, take steps to improve your credit standing before applying for a mortgage.

Consider long-term costs after retirement

While you may have a clear picture of your current financial situation, it’s equally important to anticipate how these costs will impact your budget in the years to come. 

Property taxes

One significant expense to factor in is property taxes. These taxes can vary greatly depending on the location and value of your home, and they have the potential to increase over time. 

Research the property tax rates in the area where you’re considering buying a home, and budget accordingly.

Insurance

Homeowners insurance is another ongoing cost that should not be overlooked. As a retiree, you’ll want to protect your home and belongings adequately, but premiums can add up. 

Shop around for policies that offer the coverage you need at a price that fits your budget.

Maintenance

Maintenance and repairs are inevitable expenses that come with owning a home. As a retiree, planning for these costs is crucial, as you may be on a fixed income. 

Consider the age and condition of the home you’re interested in purchasing, as older homes may require more frequent and costly upkeep. 

Set aside a portion of your budget for routine maintenance tasks, such as HVAC tune-ups, roof inspections and appliance replacements.

Potential HOA fees

If you’re considering purchasing a condominium or a home in a planned community, be sure to factor in homeowners association (HOA) fees. 

These fees can cover a variety of expenses, such as landscaping, exterior maintenance and amenities, but they can also add significantly to your monthly housing costs. 

Carefully review the HOA bylaws and budget to understand what’s included in the fees and how they may change over time.

Take advantage of your current homes equity

If you’re a current homeowner looking to buy a new house after retirement, you may have a valuable asset at your disposal: your current home’s equity. 

Home equity is the difference between your home’s market value and the outstanding balance on your mortgage. 

Over the years, you’ve likely built up significant equity through your monthly mortgage payments and any appreciation in your home’s value.

Sell the current home

One option to consider is selling your current home and using the proceeds to fund the purchase of a new home. 

By doing so, you may be able to significantly reduce or even eliminate the need for a new mortgage, lowering your monthly housing expenses in retirement.

Home equity loan or HELOC

Another possibility is to leverage your home’s equity through a home equity loan or home equity line of credit (HELOC). 

These options allow you to borrow against the equity you’ve built up in your current home, providing funds that can be used for a down payment on your new home or to cover other expenses related to your move. 

However, it’s crucial to carefully consider the terms of these loans and ensure that you can comfortably manage the additional debt in retirement.

Be aware of the loan term for your retirement house

Traditional mortgage loan terms often range from 15 to 30 years, with longer terms generally offering lower monthly payments but a higher total cost of interest over the life of the loan. 

Retirees need to weigh the pros and cons of different loan terms to select the one that best fits their budget and financial timeline. 

Consider your fixed income in retirement

A longer loan term may be more manageable for retirees who will have stable, sufficient income throughout their retirement. Longer terms provide lower monthly payments and therefore greater flexibility in your monthly budget. 

However, if you anticipate a more limited or fixed income, a shorter loan term with higher monthly payments may be more appropriate to minimize the total interest paid and ensure you can comfortably manage your housing costs.

Get Committed® can help retirees in their house hunt

Compass Mortgage’s distinctive Get Committed® program allows retirees to lock in the lowest rate possible and get a fully underwritten loan commitment even before they find the house they want to buy. 

This is an especially helpful advantage for buyers, such as retirees, where budget consideration is important.

You won’t have to worry about losing out on your dream home to competition; a Get Committed® loan commitment from Compass Mortgage helps your realtor put together the most competitive offer that sellers will seriously consider. 

Secure your dream house after retirement with Compass Mortgage

Don’t let uncertainty hold you back from enjoying your golden years in the home of your dreams. 

Contact Compass Mortgage today to discuss buying a house after retirement with one of our knowledgeable advisors. 

Apply with Compass Mortgage today and take the first step toward your dream retirement home.