over 55

 

 

 

 

Rent or Buy After 55?

I hear this from so many clients, I think it's time for a discussion on the topic.
Should you have a mortgage after age 55?

When renting is the right choice:

  1. You only plan on living in an area for a short period of time (less than 3 years)
  2. You want to try before you buy; check out the area before you commit to ownership
  3. You don't have the down payment for a home
  4. You think home prices are too high and you don't want to make a bad investment

Reasons 1-3 are valid, but number 4 is not. Why?

  1. When homes prices rise, rents rise right along with them. In fact, right now in southern California, rental prices are on par with owning a home (adding mortgage, property tax and insurance together). Mortgage rates are still very low. Also, renters do not get to write-off mortgage interest on their taxes.
  2. New home construction is down and practically nonexistent in San Diego county. This means that single family homes are in finite supply. Low inventory of homes and rentals cause prices to increase. Unless you really overpaid for a property, your investment will grow.
  3. After the one year lease, rental agreements usually move to a month-to-month basis. This means that your rent can be raised with a 30 day notice. Also, after one year, the landlord only has to give you a 60 day notice and you are back on the street. The competition for rentals is fierce right now, and the properties being fought over are not all that great either. Many don't allow pets, so this is another fact to consider. It's one thing to look for a home "on your time", it's quite another when you are surprised into it.
  4. Unlike the stock market, home prices don't move that quickly. Even if there is depreciation in the housing market, you still have a place to live. You choose when you want to sell.

In summary, do your research. If you want to move closer to the grandkids and watch them grow up over the next 10 years, then start planning now. There are a lot of variables to consider but it doesn't have to be overwhelming. We can help you get started.

 


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