Buying your dream house after many years of dreaming is like the biggest and practically one of the toughest decisions you can make. There are many things to consider and you must do it properly.
Without correct financial planning, if you are going to buy a wrong house, it can be a serious mistake that’ll have a long-term consequence. According to financial experts and retirement planners, here are few biggest mistakes you can make while buying a new house:
1. No discussion
It is important to ask or discuss with your close friends and family about the home buying process. You must communicate with your families, your friends, your kids, and also your grandkids about how and when it’ll be the greatest time to buy a house. If you don’t, it’ll be the biggest mistake of your life.
2. Wrong source
People normally put their money on a house without getting updates about the financial market. So, it’s advised that you being a retired person, must form a financial plan after discussing it with an adviser. The advisor will suggest you the appropriate amount that you can put down as a down payment. Some people require a big amount mortgage in retirement, some people don’t require mortgage in retirement, and few need a small amount that can be manageable in retirement.
People don’t like to take the mortgage at all. But, paying off a mortgage is not paying off your bills. Consider the tax impact of withdrawing from a qualified plan.
3. Other costs
People may get satisfied by checking their money and say, ‘I have enough savings to back me up’, and they may put $1,50,000 towards the home. But you must remember, you need to pull out way more than you’ve expected. You might need $200,000 to back up the down payment, federal and state taxes, and also the closing.
Make sure you can afford that money. You might need to pay for maintenance, repairs, home improvements, and modifications. Don’t forget few petty expenses also like lawn maintenance.
Retirement communities are a good option for retired persons. But, they don’t have the idea how much fee these communities can charge from them. Failure to investigate the common charge or maintenance costs may seem little in a short term but over a long time, it can be a great big problem. However, it’s your duty to know the trend of increment of these charges.
4. Save as per current income
It is a huge mistake, and you can’t ignore it. People should plan their savings in order to get a new home at the time of their retirement. But what if anyone of the spouse passes away? The income and the tax implications will become greater for the living spouse. Most individuals plan something for this moment. The main aim to make a retirement finance planning is to make provisions and resources for any of sudden crisis. So, it’s better to save as many amounts as possible from your current income. Always keep your affordability before anything.