Homebuyers' Walkthrough: Homes for Retirement
While many homeowners remain in a home for decades and throughout retirement, others may wish to pursue a home that is specific to retirement. Often, a desired location is the driving force behind buying an ideal home for retirement. Many people, for example, dream of retiring at the beach or in the mountains. Other reasons include cost or the desire to live somewhere more convenient or comfortable – no more stairs, for example, or no more large yard to mow.
When finding a home for retirement, you can make the same considerations as for a "regular" home, but with your retirement plans in mind. Will children and grandkids visit often? Which activities do you plan on pursuing? Is there close and adequate healthcare? Asking these types of questions can help you find the perfect place to call home during retirement.
Condominiums are very popular among retirees, including those who are looking to downsize from their previous homes. A condominium community may offer many opportunities to socialize, and certain developments cater specifically to seniors. In addition, many retirees enjoy traveling or live in more than one location. Living in a condominium means reduced maintenance and someone to watch the property while you are away.
Financing a condominium can be more difficult than for other types of properties. What makes condo loans so challenging is that, unlike other mortgages, the condo association also has to qualify in order for the mortgage to be approved. You (and your great credit) have little to no control over this aspect of the lending process. On the other hand, this scrutiny helps ensure that you are moving into a property that is adequately financed.
Lenders follow new guidelines from the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac. Fannie Mae requirements stipulate that:
- More than 50% of the condominium units must be owner-occupied.
- No single investor can own more than 10% of the units.
- No more than 15% of owners can be delinquent on monthly dues.
- All planned amenities must be finished if the development is more than one year old.
- Borrowers who make a down payment that is less than 25% will pay either an extra 0.75% of the loan amount at closing, or an interest rate that is approximately 0.25% higher.
If you own a vacation home, you may be able to repurpose it during retirement to become your primary residence. People who enjoy vacationing in a particular area may dream of living there during retirement. While it’s impossible to predict future home values, some buyers buy vacation homes earlier in their lives to lock in a retirement home (at current prices) for later. In addition to looking forward to using the property as a primary residence in the future, it can provide years of vacation enjoyment. (See also 12 Questions to Ask Before Buying a Vacation Home.)
People who enjoy international travel can think globally when choosing a location for retirement. The beautiful settings, low costs of living, low property taxes and access to low-cost healthcare are attractive to many soon-to-be retirees. Some of the world's most affordable housing markets aren’t in the U.S., but are still relatively close to home. If you’ve enjoyed spending time in Central America, for example, you may want to explore the region's many real estate opportunities. Certain popular international destinations attract substantial communities of expatriates.
International destinations offer a variety of benefits to homebuyers, but these purchases require extra planning and attention to details. Depending on the country, there may be rules and regulations regarding who can own property and how the property can be used. There will be visa requirements for foreign residents and special rules about filing U.S. taxes from abroad. It’s important to consult with a qualified real estate professional and attorney to determine if a purchase is both feasible and practical and to ensure you understand your rights. (For related reading, see: What Does Retirement Abroad Cost?)Homebuyers' Walkthrough: Conclusion