Real Answers for Life’s Money Challenges
My husband and I have excellent credit and very little debt.
We lost everything, including our home, in 2008.
These last 10 years, weve rented.
Weve been excellent tenants and redid the home inside and out.
Hes giving us six months.
He always said we could stay here forever as we were perfect tenants.
Our dilemma is that there are no decent affordable homes in this area nearby, and we just retired.
We want to look for a small home to buy that belongs to us.
Is it feasible for two 70-year-olds to purchase a small home?
Our combined Social Security is over $46,000 and we have savings and a 401(k).
Our credit is over 800 for each of us.
Lenders cant discriminate on the basis of age.
So the fact that you and your husband are 70 years old shouldnt preclude you from buying a home.
But the challenge here is twofold.
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For starters, retirees are considered riskier borrowers than people who have jobs.
If youre depending on income from retirement accounts, your income can drop substantially if the stock market tanks.
The second problem is one buyers of all ages grapple with.
Bidding wars are driving up selling prices above already inflated list prices in many parts of the country.
Banks wont lend you more than the appraised value.
Our team has compiled alist of creative waysyou can fatten your bank account this week.
This is a long list, so dont get overwhelmed.
Well keep it updated as offers changes or expire.
Another possibility is whats known as an asset depletion loan.
Basically, your lender uses your assets instead of your income to determine how much you might afford.
Theyll typically divide your assets by 360, representing 30 years of payments.
For investments, the value is also typically capped at 70% of the value.
Dividing $700,000 by 360, they might determine that you have about $1,945 of additional monthly income.
As youre painfully aware, finding affordable housing will be the big challenge, whether you rent or buy.
This may be a long shot if youre in a highly competitive area.
But its worth asking, given that this could be convenient for him.
Did you know?
Would you be willing to live in a small condo instead of a house?
Expect to grapple with these questions, even if you wind up renting again.
Though I hate to say it, youll probably need to increase your housing budget no matter what.
The bright side is that you have six months to prepare.
Start talking to lenders about your options now.
Also start looking at both rentals and homes for sale now, even though moving day is months away.
Obviously, it can take significant time to find a home in an overheated market.
But if youre buying, sometimes flexibility can help you make a stronger offer.
Its understandable why you want to buy so badly, given the disruption to your retirement plans.
But try not to get caught up in the homebuying frenzy.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder.
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