Why You Should Buy Cheap Houses After Retirement
After you retire, chances are you'll want to downsize. But buying cheap houses is better than renting. Here's why.
Thinking about how to spend your golden years?
Retirement should be a relaxing time in your life. Some retirees invest their money into buying cheap houses instead of renting.
Wondering if buying a house after retirement is right for you?
A House is Always a Good Investment
If you're debating whether to buy or rent a home after retirement, consider that buying a home is a better investment than renting.
When you're renting, your money is going to the landlord. If you own the home, your money goes into a property that is yours.
You Will Build Equity
If you're worried about the money you're putting into the home and taking out of your retirement accounts, don't forget about home equity.
Assuming you don't default on your mortgage, you will be able to use the home equity as supplemental income when you need it.
Someone Will Benefit from the Home
Purchasing a home after you retire might make you wonder if you'll take full advantage.
However, you can also consider the home as an asset you can pass down to your children or grandchildren.
Think of how beneficial the money from the house could be for them in the future.
No Cost of Living Change
Renting might seem also a great option when you retire because you'll have fewer responsibilities. However, if you own a house after retirement you won't have to worry about the cost of living going up.
Your landlord might raise the rent every year and this could take a chunk out of your finances in the long run.
You Might Avoid PMI
Every homeowner who puts down less than 20 percent on a house, has to purchase private mortgage insurance (PMI). This added insurance can raise your mortgage.
However, if you take advantage of your retirement accounts to put down at least 20 percent you will avoid paying for PMI.
Consider the Cons
Although buying a home after retirement has its pros, there are also a few cons.
Should anything go wrong with your house, you will be responsible for all of the repairs. You might have to pay for things like broken water heaters and roof repairs.
You will have to think about property taxes. Seniors might have a hard time as property taxes increase and their valuables and income decreases.
Cheap Houses Might not Be as Valuable
Although cheap houses have their appeal during retirement, how valuable they're over time, the depends on their condition.
If you fail to make upgrades and allow the house to deteriorate, it might not be as valuable.
Consider Buying a Home After Retirement
Buying a home after retirement in a great option if you want to build equity, build assets to pass on, and not worry about rent going up.
As always, carefully consider your financial situation before making a decision that this.
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