Home buying, selling and getting a mortgage in retirement. This reader wants to know how to time selling their home and getting financing for a new one.

Q: I am single and have an 800+ credit score. I plan to retire in the next year or so and move to a small town in the Carolinas. I’m expecting the home to be less expensive and smaller. I might also buy a slightly older home that is liveable but that I could remodel while I live there. 

After selling my current home, I’ll ultimately net a nice little chunk to travel and for my retirement. 

My question relates to the sequence on buying, selling, and getting mortgages. Is it easier to get a mortgage now, while I’m employed, then purchase and remodel the home now? If I did that, then I’d sell my current home and move? I know it means carrying two properties at the same time for a while. If not, how should I sequence the sale, purchase and remodeling of my homes? 

Home Buying, Selling and Getting a Mortgage in Retirement

A: Buy now, sell later? Or, sell first and then buy (maybe after a period in a rental). It’s the right question to ask, particularly if you’re on the verge of retiring and your financial situation is going to change dramatically.

We tend to be a bit more conservative. We generally prefer to see our sellers sell their homes before buying another one. Owning and carrying two homes can eat up quite a chunk of change and most people don’t have the stomach to pay for two homes at the same time, not to mention the cost of remodeling the new property.

Real estate is hot in some markets. If you are selling in a hot market, and you have the financial wherewithal to hold onto both properties for a year, then go ahead and start looking for your new home. If you find a bunch of things in your price range, you might then list your current home, and if you get a sale quickly, move into a rental while you find your next home.

Once you’ve sold your home, the worst thing that could happen to you is that it could take you a while to find a new home that suits your needs. While you might have researched the market, narrowed down the area you want to move to, decided on the type of home and the budget for renovation, it still might take a while to find the perfect home. But, you would have sold your old home and have cash on hand. Having cash means you’ve got so many options available to you.

Financing a Home in Retirement

On the financing front, you seem to have great credit with a score over 800. And, yes, it’ll be easier to find a lender that will give you a mortgage when you have a job than when you don’t, especially if you’ve had that job for a while. To qualify for a new loan after you have retired, you’ll have to show that you have sufficient income to carry the loan and the expenses. For many people that have retired, showing that income stream can be tough, especially when people live off their savings.

Talk to a mortgage broker, mortgage lender or credit union to go over your current finances and what you think your finances will look like post-retirement. Qualifying for a loan can be such a complicated process, especially for retirees. borrowers that are retired that have no problems qualifying for loans, but they will generally put down a higher amount as a down payment towards the purchase of the home and have verified income from Social Security, investments and pensions. 

The lender may tell you that you shouldn’t expect to qualify for a loan or may tell you what you need to qualify once you don’t have a job. Once you have that information, you can think about whether it makes sense to buy the new home now or wait until you’ve sold your existing home.

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