» Renting In Retirement & Renting After Retirement
Buying a home is a big milestone and investment. When you think about becoming a homeowner, the obvious choice is to buy a home while you are still employed.
There’s a steady source of income coming in and you’re still strong enough to enjoy the amenities of your new home. But is it really too late to become a homeowner once you’ve reached the retirement age?
Buying a home at that age may not be the ideal situation for everyone, but it’s definitely not impossible. If you’re planning on buying a home as a senior, then there are many things to consider before making the decision.
In this blog, we’ll be discussing some things to consider when buying a home after 60, the pros and cons of renting as a senior and helping you figure out the best option for you.
Read on to know more…
Pros and Cons of Buying a Home After Age 60
Every situation has its pros and cons. If you’re a senior citizen that’s planning to buy a house or are at least nearing that age, then you may want to take note of these pros and cons before you decide.
Pros
1. No unexpected price increases. When you’re renting an apartment, you will most likely have to deal with landlords who increase your monthly rent. This is understandable, as certain factors like housing costs and maintenance could be expensive.
However, you won’t have to deal with this once you buy a house. Mortgage rates are often fixed and do not fluctuate. You’ll gain the stability of paying for the same amount each month, which allows you to plan your budget and allocate your costs better.
2. Financial equity. Buying a home allows you to make the most of what you paid for. When you’re paying off a mortgage for your home, you are investing in something that you can use and enjoy as a property of your own.
Every penny you pay will be well worth it, as you will be able to take advantage of the benefits you gain from purchasing your own home. Don’t let yourself be intimidated by the hefty price tag of buying a home.
You would most likely be paying a similar amount if you plan on renting for the rest of your life, so it may be better to spend money on something you can call your own property.
3. Enjoy tax benefits. In terms of taxes, homeowners enjoy benefits and savings that renters do not.
The Tax Cuts and Jobs Act of 2017 have set the property tax deductions to a maximum of $10,000. This is great news for seniors who are living in retirement, as they’ll be able to set the extra savings aside for other important matters or as an additional investment to their retirement or health savings.
This can be considered another advantage for seniors, as it suggests that becoming a homeowner is much cheaper than renting a property for the rest of your life.
4. Have your own space. A home is something you own. You can do whatever you want with it, decorate it however you please, or make any adjustments and renovations when you think it is necessary. You make the decisions for your home.
You may have to talk your desired changes out with your family or any companions living with you, but having your own home eliminates the trouble of negotiating with your landlord or asking for their permission to change something in your living area.
Cons
1. Covering the costs. You are in charge of paying for everything. Aside from utilities and personal needs, you also need to pay for everything that involves the house. You need to pay for insurance, property taxes, any necessary fees or permits, maintenance, and many more.
The expenses will keep coming, even after you pay off your mortgage. It’s best to be prepared to cover additional costs for living in your home. Plan your budget accordingly.
You also need to set aside some extra money, in case any emergency repairs or maintenance is needed. Becoming a homeowner is undeniably expensive.
2. Lifestyle changes. How long do you think you’ll be a perfect match for your new home? Sometimes, your dream home may not be the most suitable house for your body as you age.
If you’re planning on buying a house as a senior, take a moment to think about a few things.
Try to think ahead and picture yourself in the future. Make sure you have options and solutions to any possible dilemmas. Otherwise, you may have to sell the house and find something more suitable.
Should Seniors Rent or Buy a Condo?
If you are still having trouble deciding on what to do after reading through the pros and cons of becoming a homeowner, then perhaps taking a look at the same concept with renting can help you out.
Just like purchasing a home, renting a property as a senior can be both beneficial or stressful, depending on the situation.
Pros
1. Scalable and Flexible. You can’t just move out of a home if you think that it doesn’t suit you.
Once you own a property, you are responsible for it. When you’re renting a property, you can come and go anytime you want, as long as it’s consistent with the timeframe stated on your lease.
If you think that a certain property or condo can’t meet your needs, then it’s easier to begin apartment hunting for a new place to live.
Aside from your lease, there are no commitments to leave behind when you move from one place to another as a renter.
2. Fewer costs. Most of the time, renters only have to pay for their rent and utilities. The landlord covers all the maintenance costs of living in a rental property, so you won’t have to spend money on that.
In most places, the landlord will only require a tenant to pay for repairs and maintenance if the tenant is responsible for the damage. Otherwise, the landlord will cover all financial aspects involved in keeping the property safe to live in and in good condition.
Cons
1. Restrictions. Living in a rental property means that you will have to abide by your landlord or property manager’s rules and regulations.
Most large amenities and renovations are not allowed, so you will either have to gain your landlord’s favor or adjust your needs to match their rules. You can’t make any major changes like space expansions or room renovations.
Everything that happens to the property can only be done once you secure your landlord’s approval. This is the opposite of what you may experience as a homeowner, wherein you can create your own rules and adjustments to the property.
2. No equity. When you’re renting out an apartment, you’re paying for the present and not for the future.
You get no financial equity from renting. All the money you pay for rent is as good as gone, especially if you decide to move out and find another place.
You’re paying for the space you occupy for the time being, rather than paying for something that you can use as your own. In this area, it’s obvious that buying a home offers greater value for money than renting.
So, is it better to keep renting or buy a condo as a senior? Take a good look at all these pros and cons we’ve mentioned and feel free to use it as a reference for future situations.
Can a Retired Person Rent an Apartment?
The answer is yes. Retired seniors are definitely still qualified to become tenants for rental properties.
Although you won’t be earning a stable income from your job anymore, rest assured that many property owners consider other options as proof of income. There are many other sources.
Aside from salary, landlords and property managers may consider the following options as income:
- Pension payments
- Alimony
- Money from savings and withdrawals
- Social Security (SSI)
- Social Security Disability Income (SSDI)
- Income from owned businesses or assets
- Income from investments
If you have access to any of the mentioned sources of income, then it’s likely that you’ll be able to continue renting even after you’ve retired from your job.
Still Renting at 50: What to Consider
Your fifties are a phase in your life where big financial decisions are less intimidating, as you most likely still have a job to reel in a stable income. If you’re still renting at 50, then you should know that it’s still possible to apply for a mortgage at this age.
With that in mind, think about whether you truly plan on renting for the rest of your life or if you want to take a leap and purchase your own home.
Deciding at this age is evidently better than making the decision later on, as you have more time to save and plan before retirement.
If you are still renting at 50, then here are some things you may need to think about.
Do I need a home of my own?
Some individuals do not feel the need to have their own home, which is completely fine. It depends on our own preferences and situations.
For example, many individuals and senior citizens live alone or have no nearby family, which is why they may think that renting out a property is a more practical and cost-efficient option compared to buying their own home.
Is it really what I need?
Your fifties is where you really need to start sorting out your priorities. This is the age where you must consider what you need to save the most money for. Do you think that it’s worth investing so much money in a home?
Do you think you would ever need to use that money for something else, like your emergency funds, personal retirement fund, or healthcare funds?
If you think that you need to invest in something that is more important than having your own property, then it may be best to continue renting and prioritize that instead.
What type of mortgage should I apply for?
Long-term mortgages are a great option if you’re ages away from retiring. Aspiring homeowners from the age of 20 to early 40s may not have to worry about long-term mortgages, as they have years to go before they reach the retirement age.
On the other hand, applying for a long-term mortgage in your 50s may not be the same case. If you apply for a 30-year lease, then the chances are that you will be paying for it until you’re 80. Do you really want to spend your time, at that age, paying off a loan?
Still Renting at 60: Is It Time to Buy a Home?
A report by Statista shows that only 10% of individuals buy their first home at the age of 57 to 66. With such a small number, is buying a home at this age really a good idea?
The answer depends on your situation. When you’re in your 60s, you need to pay careful attention to what you need.
What’s your health like?
Do you need somebody to take care of you or can you continue living independently?
Do you think the facilities and amenities in your current rental still meet your and your body’s needs?
Will buying a home make you more comfortable in the long run?
The answer ultimately depends on you.
There is no time limit or deadline for purchasing your home. If you find it more peaceful and convenient to keep renting, then feel free to do so.
If you like the idea of settling down and growing old in your home, then you’re welcome to start house-hunting as well.
As long as you have a good credit score, a stable source of income, and a goal for your future home, then there is nothing that can stop you from purchasing your own property.
Conclusion
It’s never too late to become a homeowner. At the same time, there is nothing wrong with choosing to keep renting if you think that is the lifestyle that suits you best.
Overall, the best option is a choice that will benefit you the most in the long run.If you have any further questions, feel free to contact us. We’d be happy to help.