You Should Buy Your Retirement Home Before You Retire

Planning to leave the workforce and retire in five to 10 years can seem a long ways away. Buying a retirement home now can actually pay off in the long term to capitalize on some benefits offered to homeowners. Learn five reasons to buy a home while still fully employed.

Easier Approval for Mortgage

Mortgage lenders evaluate loan applications based on debt-to-income ratio, the total monthly debt divided by gross monthly income. It is easier to qualify for a home loan while earning a steady paycheck. Waiting until retirement to apply for a mortgage can limit the size of loan which can be qualified for with lenders.

Cash Flow

Most people want to make some renovations and changes to a property once purchased. Setting a budget can help plan for the changes. A regular income is nice to have when updating or modifying a home. Working full-time can protect a person financially if major issues are uncovered. Retirement may not afford for life's inevitabilities when it comes to repair work including mold issues or water damage to a property that becomes an unexpected expense.

Get Ahead

To become debt-free in retirement, many retirees decide to rent rather than own. Becoming a homeowner has benefits if the home is bought early. Tackling mortgage debt can put a person in a position to accelerate payments while working.

Long Term Vision

One of the biggest challenges is knowing how to predict expenses in retirement. It is usually difficult to know how much money will be needed for housing. Purchasing a home provides the broader picture of what monthly expenses will look like in retirement and supports creation of a more accurate budget. The largest monthly expense in a person's budget is usually a mortgage. Knowing what payments can be will prove beneficial for long term planning.

Expand Portfolio

Financially if a person is able to carry two mortgages at the same time, it may make sense to buy the home and rent it for a few years until it is time to move. Owning a rental property can help a person retire sooner if the stream of income provides extra cash flow for the nest egg. Tax benefits can also be given for the rental property. It is best to contact the IRS to find out what benefits exist for people who rent out a property. In addition, more money in a retirement nest egg can be set aside for those changes that need to be made to the property or for emergencies.

Why You Should Live in a House Before Renovating

Many buyers are looking for move-in ready homes. Significant opportunities are available in prime locations with home that linger on the market yet need some work. Some individuals will flock to the homes to customize to personal requirements and built equity along the way. Learn why it is important to live in a space before starting renovations on a property.

Minds Can Change

Living in a home can start with grand visions of seeing changes to be made but, based on the condition and priorities, things can shift over time. When a person actually lives in a space, it is easier to see exactly how to use the house, what will work and what will not. The day-to-day experience will inform home improvement decisions of how to use the home every day.

Take a Break

Purchasing a home is a massive project in itself. Along with an enormous change, it is a shock to the system. Finances change and buyers jump through so many hoops, spending months looking for a home. It becomes almost a part-time job. A home renovation, likewise, can become a big, stressful project with decisions to make and contractors to deal with. Take a break, enjoy the new home, then start looking into renovations.

Time to Plan

Renovations need to be carefully thought out, planned and designed. Multiple architects, contractors or designers must be involved in the process which is time-consuming. Hiring the right people to take on renovations can save time, money and headaches down the road. Some buyers want to start right away to get the home into perfect shape but do not want to pay rent and mortgage at the same time. Buyers need to plan ahead for even the best laid plans can go awry.

Buyers who said on day one that a home which requires work was not on the list, that is often what people end up doing to some extent. It is the natural evolution of buying a home in that people don't always want a brand new, pristine building and will go for character first. Rarely someone buys the home which was at the top of one's list or one which the people started off thinking about. While people should remain open to doing some work on a home, it is not worth it to get stressed about doing it all at once. Living in a home as-is for six months gives the home a test drive to see how things run and how the family utilizes space. It may be surprising what can work one perspective shifts, priorities change and everyone gets a chance to see what is happening on a day-to-day basis. A family may just settle in and decide on less renovations once the home feels lived in.

There are several Pros and Cons of Renting When You Retire, especially when considering homes in Indian Lake Ohio.  Older renters are on the rise, with households aged 55 and over contributing 42 percent of renter household growth as reported by the Joint Center for Housing Studies at Harvard University in 2015. The rate will only increase as more Baby Boomers hit retirement age. Consider some of the pros and cons of renting in retirement.

 

Pro: no more mortgage

People who choose to rent in retirement are no longer making monthly mortgage payments. Depending on the financial situation, this may mean entering retirement debt-free.

Con: No more taxes

Homeowners receive tax incentives including deductions for property taxes and mortgage interest. Savings can add up in states with high property taxes.

Pro: No longer tied down

Dream retirement looks different for people but many enjoy the freedom of not being tied to a home. Renting offers flexibility since there is no house to maintain.

Con: Losing 'homeowner' status

A sense of pride comes with being a homeowner. Emotional attachment may occur with a home so mental preparation is required before selling and moving on.

Pro: Less stress over maintenance

Property ownership comes with a huge burden of maintenance which becomes more cumbersome with age. A single-family home may mean responsibilities for repairs, manual labor, mowing, shoveling snow or cleaning gutters. A rental means the landlord or property management company generally takes over those tasks.

Con: Expenses

Renting can be more expensive than owning one's own home, depending on location. Interest rates for mortgages may make it more affordable to consider home ownership.

Pro: Amenities and no fees

A single-family home may provide stability but renting may offer amenities such as a swimming pool, fitness center, party room, lounge and private parking. If traveling in retirement, a concierge can accept packages as a nice perk when people are away.

Con: Dealing with landlords

It takes getting used to having someone else in charge while renting. Having a landlord or property management company can feel oppressive. Screen potential places before signing a lease, talk to previous tenants and find out how the landlord responds to maintenance issues. The landlord or property management company can decide to raise rent once lease is up.

Renting versus home ownership is a personal decision for people entering retirement. Many factors must be taken into consideration including age at retirement, health, economic status and any desires to travel. It is up to each individual or couple to decide what will work best in retirement and provide for their individual needs moving forward.

Central Ohio Homes face all the onslaughts of winter and the cold.  Snowbirds who head south for winter can help protect a vacant home with some easy steps. Theft, water damage, heating and electrical system malfunctions are possible threats while a person is away for long periods of time. Learn how to winterize a home to avoid some of the pitfalls that occur with a home left unoccupied for the cooler months.

Appearances Matter

A home which appears occupied is going to be a less likely target for theft. The following steps can help:

• Forward mail, stop newspaper delivery or ask a friend to collect items

• Arrange for snow removal after storms

• Use motion-sensitive exterior and interior lights on timers and set for varying times to discourage prowlers

Protection from Thieves

Thieves may notice when a family has left a home unoccupied and try to gain access to the property and items left in the home. Start with the following steps to protect a home from thieves:

• Secure external doors and windows with deadbolt locks and install locks on sliding glass or French doors

• Do not post vacation or travel plans on social media where potential thieves can find the information easily

• Store valuables left behind in a safe deposit box or secure offsite location

Protect Pipes

Water damage can be a huge expense and headache for homeowners who are away for the winter. Follow these tips to avoid water damage:

• Completely turn off water supply if nobody is living in the home for a long period of time. Consult with a heating professional about options for heating systems

• Drain pipes of water by opening faucets, flushing the toilet and pouring antifreeze into the toilet tanks and bowls to prevent remaining water from freezing and cracking

Keep Home Plumbing Warm

When a family vacates a property for a period of time, the water supply may stay on. If this is the case, here is what to do for protection against the elements:

• Keep furnace running to help ensure home stays warm and pipes do not freeze if not draining water pipes

• Set temperature at 55 degrees or higher to help keep interior of the floor and wall cavities above freezing (where water pipes are located).

• Shut off water to washing machines and dishwashers to avoid leaks

• Turn off heat source and water supply to hot water heaters

• Consider shutting off and draining outdoor water faucets

Routine Maintenance

Routine maintenance checks are important for a home. Have the heating system inspected and serviced before winter. The fuel tanks must be filled and someone should check fuel levels while the family is away. Be sure to maintain electrical power if the heating system will be running. Remove dead trees or limbs to avoid property damage and unplug all unnecessary appliances prior to leaving.