Planning to leave the workplace sometime in the next five to 10
years? Buying your retirement home now can pay off big in the
long term, particularly if you’re going to get a mortgage.
There are more financial benefits to purchasing your retirement
home while you’re still working full time. Here are five reasons why you should
buy now rather than wait until you retire.
1. Easier to get approved
for a mortgage
When mortgage lenders evaluate your loan application they look
closely at your debt-to-income-ratio, your total monthly debt divided by your
gross monthly income, which is going to be a lower, more favorable percentage
while you’re fully employed. Therefore, it’s easier to qualify for a home loan
while you’re still earning a steady paycheck. If you wait until your retired to
apply for a mortgage, you could be limiting what size loan you can qualify for.
2. More cash flow for Renovation
Set a budget on the work you plan to do to the home. By working
full-time during this period, you’re also protected financially if you uncover
a major problem with the home. It is nice to have an income while you are doing
the updates right away.
3. A head start on paying
off your mortgage
It is a great goal to be debt-free when you retire, which is why
it is important to purchase your retirement home before you actually retire. By
starting to tackle your mortgage debt while you’re still actively working,
you’re in a position to accelerate your payments to pay it off
faster, where you wouldn’t be able to do this when you are retired.
4. Plan better for the long
term
Many people don’t know what living expenses will be in
retirement. By buying your retirement home now, you’ll get a better picture of
what your monthly expenses will be in retirement — and that means you can
create a more accurate budget.
5. Expand your portfolio
If you’re financially able to carry two mortgages at once, it
may make sense to buy your retirement home now and rent it out for a few years
until you’re ready to move in. Owning a rental property could also help you
retire sooner, since you’re adding an extra stream of income that you can put
toward your mortgage.
