5 homebuying tips for seniors
Today's housing market can be challenging to navigate if you're shopping for a new home, and that's especially true for seniors. After all, most seniors are living on a fixed income. That, coupled with high mortgage rates and a limited supply of available homes, can create hurdles in finding affordable housing options.
But there are still affordable options out there, and the market may be easier to navigate if you make a few smart homebuying moves — especially if you have a strong credit history. And, there are a few things seniors, in particular, can do to reduce the stress associated with shopping for a new home.
Find out how affordable a new mortgage could be today.
5 homebuying tips for seniors
Here are a few tips to help you make sure that you're successful when shopping for a home as a senior.
Consider purchasing mortgage points
The home you purchase may be the home you plan to stay in for the long haul. If that's the case, you may want to consider purchasing mortgage points. These points work like prepaid interest, with one point bringing your mortgage rate down by a percentage of a point. Since mortgage interest plays a significant role in your monthly payments, an interest rate reduction of 0.25% — which is the average decrease per point — could have a meaningful difference on your monthly payment.
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Consider an adjustable-rate mortgage
An adjustable-rate mortgage (ARM) may be another effective way to make sure your mortgage payments are affordable. That's because an ARM loan has a variable interest rate after a period of fixed interest, and that initial fixed interest rate typically starts lower than the rates being offered on fixed-rate conventional loans. After the fixed period ends, the rate on the ARM loan can change based on the overall rate environment.
That can be beneficial in a high-rate environment, as you'll start with a lower immediate mortgage rate than you would with a fixed-rate mortgage. And, experts expect interest rates to drop later this year. If that happens, the rate on your ARM loan could adjust downward after the fixed-rate period ends, which could result in lower monthly payments in the future.
In turn, you could open an ARM today and potentially take advantage of adjustments if rates decline in the future. And, if rates start to climb over time, you can consider refinancing at a lower fixed rate.
Shop around for the best rate possible
Purchasing mortgage points and opting for an adjustable-rate mortgage could help reduce the cost of your new home. However, it's also important to shop around.
Keep in mind that rates can vary by mortgage lender so some companies will likely charge higher rates than others. So, it can benefit you to compare at least a few options to make sure you get a competitive mortgage rate.
Think about your needs
As you age, your housing needs will likely change. For example, you may want to look for a single-story home in case you develop mobility issues in retirement.
Moreover, older adults typically tend to have more medical needs. As such, you may want to purchase a home that's close to your doctor's office and other medical services. Or, you may want to consider purchasing a home that's near your favorite shopping centers and recreational options.
Don't believe the myths
There's a common belief that it's more difficult to get a mortgage at an older age. But "age is not a barrier to applying for a mortgage," says Doug Seabolt, CEO of Rocket Homes. "The only things that lenders consider are the buyer's current financial qualifications, including their income, assets and credit."
And, age discrimination could get lenders in trouble.
"Lenders are prohibited from taking age into account thanks to the Equal Credit Opportunity Act. At any age, homeownership is an excellent opportunity to build equity while owning a valuable asset that can build generational wealth," Seabolt says.
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The bottom line
As a senior, your housing needs may differ, and finding the perfect home can be a challenge — but it's not impossible. It can be helpful to look for homes that are accessible and in close proximity to the things that are important to you — and consider opportunities to reduce your costs through mortgage points and ARMs as you shop for your new home.
