Buying a House in Retirement
Contemporary Retirement By Alane Cunningham – There has never been a better time to buy a house.
You’ve all heard it. Well, I have no proof, only personal experience. And I say, there may be no better time, but if you are retired without a steady income, just try it. Interest rates are at historic lows and for some there are large tax incentives to close your purchase before June 30th.
That was not really what drove my desire for a home. After retiring, my husband and I moved into a condominium. While that lifestyle worked for awhile, I realized if we were ever going to own a house again, we probably needed to do it before we become unable to care for a house and yard. In retrospect, perhaps, we did things in reverse. A condominium, or some type of community where you are not responsible for the upkeep of home and yard may be appealing at some point, but not yet. And maybe there will come a time when people stay in their homes and have live-in caretakers. The future is impossible to know, but for now, a house has a certain appeal.
We decided to look for a new home in Florida, we soon became familiar with the term Short Sale. And for those unfamiliar with the term, a short sale is a situation where the homeowner owes more than the home is worth and can no longer make payments. In a short sale, the bank, the homeowner and the potential homebuyer negotiate to try and find a price that minimizes the bank’s loss in a market that is still questionable. There are no hard and fast rules for short sales and they can take a long time to finalize.
When we first entered the housing search, we were interested in a short sale home. After six months, we lost the house to a couple who had put the first bid on the house.
Discouraged, but still hopeful, we looked at many different houses in many different locations and became familiar with the ever changing market and pricing. When a foreclosed home became available, in the area we wanted, we jumped on it.
We were one of six bids on the first day. After two days we were told to bring our best offer. We stayed with our original bid, and although it was not the highest, it was accepted. At that point, we were ecstatic and thought there was some cosmic force at work rewarding us because we had lost the short sale home.
Then we applied for a mortgage. We were told we have an excellent credit rating and that there should be no problem closing. But that’s where the catch comes in. If you have started drawing your retirement benefits, good for you, you will probably get a mortgage and live happily ever after. However, if you haven’t, regardless of your assets, it is going to be rough going. And unless you have cash it is going to be a long process.
We have been told that because of the recent mortgage security crisis, the laws have been rewritten. If you are retirement age, you probably remember the good old days when you had to have 20% down to get a mortgage. Well, you need that now, but that is only the beginning. The laws have been written so you need to show you have a steady income. Savings, other assets, are not enough, even if your assets far exceed the value of the mortgage!
Our story had a happy ending. We got our house. Although, we came very close to walking away several times because the red-tape became excruciating.
As I told our loan officer this process is crazy. She agreed, but that is not going to change anything.
I vowed that I would tell everyone that I could that this process is not working and the lending laws need to be changed. And I just did. Oh, by the way, we did get that mortgage and love our new home.
About Alane Cunningham
Alane is a graduate of Eastern Michigan University. She retired from the University of Michigan after 27 years. She currently lives in Florida in a small beachside community with her husband. She navigates retirement with human nature observations realizing everyone must find their own way to happiness through this passage of life.