April 19, 2011 — It is almost a certainty that as a retiree, housing is going to be the most important item in your budget. Unfortunately, many people will make serious mistakes regarding their housing choices and the way they are financed. We recently were referred to an excellent and helpful guide, Housing and Mortgages for Seniors. It is definitely recommended reading, and here are some of its key points:
The report details the most common housing/financial problems that people over
55 face. Those include owning a house larger than they need; a sudden need for expensive medical care that they can’t afford; and deciding whether to refinance, pay down their mortgage, or take out a reverse mortgage.
The biggest mistake most seniors make is having a sentimental attachment to their home, and not viewing it as a financial asset. Downsizing and moving to an age-appropriate home is usually the smart decision.
Retiring with a Mortgage
The guide discusses in detail the pros and cons of retiring with a mortgage – taking one out, paying it off, refinancing, etc.
Types of Mortgages
We were surprised at just how many types of mortgages there are available (7 are explained here). Reverse mortgages, which in our opinion are about the most misunderstood financial instruments there are (aside from collaterized debt swaps or derivatives), are explained in a positive light and understandable way, which is saying something.
The full article contains numerous helpful links where you can help educate yourself about these important decisions and financial instruments.
The article stresses that most people don’t downsize soon enough. It stresses that it is critical to be well-informed about the housing and financial decisions you make because they are so important to your financial health. We couldn’t agree more.
For further reference:
Is There a Reverse Mortgage in Your Future