A just-married couple in their 60s is currently hunting for the right Victorian-style house. Once they find it, the husband, an electronics industry consultant, plans to sell his Colonial property, and his wife, an elementary school teacher, will let go of her condo.
“They’re extremely excited about putting roots down together,” says Ronald Phipps, the real estate broker representing the pair.
At this point in the U.S. economic cycle, many baby boomers are more interested in buying a home than are people in their 20s and 30s, said Phipps, president of the National Association of Realtors.
“Older people are often more strategic in their thinking about real estate. They’re perceptive about the buying opportunities now available. And they see how a fixed-rate mortgage can help stabilize their housing costs over time,” Phipps says.
However, Eric Tyson, a personal finance expert, says many newly married older couples with sufficient resources to purchase a home still need to have a great deal of discussion before making a final property decision.
“After a lifetime of experience, people often come from radically different perspectives on the right house to buy,” says Tyson, co-author of “Home Buying for Dummies.”
For instance, one partner might view the home purchase as a relatively short-term move, expecting to live there for just five years or so. But the other might perceive the place as one they’ll hold for life, or as long as their health holds up.
Likewise, homebuyers can have widely divergent views on the ideal setting for their property and whether it should be in a city, suburb or rural place.
Here are a few pointers for older couples seeking to buy a property together:
Factor retirement into your home-buying plans
Though already in their 60s, the consultant and the teacher are still working. But in choosing the home they plan to buy, they’re heavily focused on picking a relatively carefree retirement property.
They’re seeking a smaller home with no more than 1,400 to 1,600 square feet of living space and just two bedrooms, plus a library.
Of course, not all late-marrying couples who are approaching retirement have the means to consider a wide range of lifestyle options. Indeed, many who expect to support themselves on Social Security and limited savings can’t even contemplate buying a different home. Instead, they’ll stay put in a property one of the spouses acquired before marriage.
But older couples with ample funds for the purchase of a retirement place often have a wider array of choices than do younger people still in the workforce, Tyson notes.
“When you’re working, your commute is still a limiting factor on where you can live. Also, when your children are small, you’re still looking for good neighborhood schools,” he says.
Include practical factors in your home purchase planning.
Those 55 and older should be especially cautious about the financial implications of their housing decisions, Phipps says. That’s because once they retire, many people have limited financial resources.
Are you and your spouse pre-retirees who’d like to have low housing costs when you retire, yet still want to purchase a different property for this period of your life? If so, Phipps suggests you seriously consider making a large down payment and also using a mortgage with a term shorter than 30 years.
“Many older buyers like 10- or 15-year mortgages, or they choose to make pre-payments on a 30-year mortgage,” he says.
Phipps also recommends that people trying to balance their home-buying desires with their retirement goals may wish to consult a financial planner for advice. He says it’s often wise to use a planner who’s compensated on a fee-only basis, rather than through commissions on the sale of securities or insurance products.
One source of referrals to fee-only planners is the National Association of Personal Financial Advisors.
Plan a face-to-face meeting with a mortgage lender.
Phipps recommends that before you go home shopping, you arrange a face-to-face meeting with a mortgage lender to discuss your financing plans and gain mortgage pre-approval.
He says buyers who meet face-to-face with lenders are more likely to get extra time and faster processing for their loan application, as well as the solid information they need to understand the changing mortgage market, with its stringent standards.
“Many older buyers have bought property in the past. So they know the basic mechanics of mortgages. What they don’t understand is how all the processing and paperwork requirements have changed lately. It’s very helpful to educate yourself on these changes,” Phipps says.
Ellen James Martin, a former real estate editor at The Baltimore Sun, gives advice for anyone buying, selling or financing a home.