My husband and I are wanting to purchase our first home. We are 58 years old and are concerned that we are too old, and will have a hard time getting a mortgage. Should we buy or continue to lease? We have saved $35,000. Thanks for your help!
I’m not quite sure 58 years old is too old for anything these days. A dear friend of mine started a successful business when he was 62, and some 18 years later, both he and his business are thriving. Any first-time homebuyer should take time to understand the true costs of homeownership. At 58, you’ll have a few extra considerations, but if you have good answers for the questions those considerations create, then homeownership might just be for you.
We must begin where I always begin on this topic. Homeownership is not the American Dream.
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This is worth acknowledging because it takes a tremendous amount of pressure off the home buying experience. In fact, many people feel like they’re failing, simply because they aren’t homeowners. Nothing could be further from the truth. You’re failing if you buy a home when you shouldn’t.
You can’t let societal or cultural pressure affect your decision-making process.
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Next, you can’t let the theoretical affordability of the monthly mortgage distract you from the true affordability of homeownership. Your monthly mortgage payment will increase over time. Most first-time homebuyers don’t realize that. It goes up because property taxes and homeowners’ insurance premiums go up. Too many people buy as much home as they can, and then the annual increases in mortgage payments leave them in a cash crunch.
As a person approaches retirement, a period of time often involving fixed income, an ever-increasing mortgage payment can be a bit of a shock. And this is before we get to the toughest part of being a homeowner.
The primary challenge of owning is maintenance and repairs. These obligations should convince many prospective homebuyers to abandon their search. If you can’t afford to fix a house, you should rent, not buy.
This is a shocking revelation for many, even those who are buying their first home at 58 years old.
However, my biggest concern about your question revolves around the $35,000 you’ve saved. One of the biggest mistakes new homebuyers make is wiping-out their savings to make a downpayment on a home. While buying a home certainly requires a pile of cash, so does owning one. You know all those repairs your landlord makes on your behalf, the ones you don’t pay? Those repairs, and those invoices, will be your responsibility once you own. And if you drained your emergency fund for the downpayment, that’s a really big problem.
Beyond that natural concern about your emergency savings, a person approaching retirement should have a much larger than normal emergency fund, because that emergency fund may have to last them decades. Your retirement emergency fund is different than your 401k, IRA, or other income-generating monies.
Bluntly, if the $35,000 you have saved is all the money you have saved, including your emergency fund, you shouldn’t purchase a house. You’ll find more stability by continuing to rent. Remember, you’re heading toward a period of time, retirement, in which your income is likely to freeze.
Yes, a bank will grant you a mortgage at age 58. This approval may seem like some sort of financial validation or blessing. It is not. It means they think you’ll be able to pay the mortgage for a while. Just because someone or someplace is willing to lend you money, it doesn’t mean you should take it.
Pete the Planner
Peter Dunn is an author, speaker and radio host, and he has a free podcast: “Million Dollar Plan.” Have a question for Pete the Planner? Email him at [email protected] The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.