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As the country waits patiently for the housing market to recover, older Americans are finding it harder to get mortgage approvals. Despite the signs of a cooling market, the following questions arise: Should older Americans pay rent in retirement instead of paying a mortgage?
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Difficulties in getting mortgage approval
As The New York Times reported, it’s not uncommon for older Americans to be denied mortgages or refinance agreements because they have little retirement income or are too old. This is despite the fact that older people usually have more credit than younger people.
According to a working paper by Philadelphia Federal Reserve economist Natty Amon Siripanich, “Age appears to be as important a correlate of mortgage application outcomes as race and ethnicity. Overall, the results suggest that seniors systematically face higher barriers to accessing mortgages.”
Amornsiripanitch suggests that more and more mortgage applicants get denied as they get older, and even more once they reach 70.
Have the best, hassle-free retirement
Living comfortably in retirement may require you to make the difficult decision of paying off your mortgage or downsizing to a rental property, but regardless of your mortgage and age stats, renting is a retirement option. It can be the ideal solution for simplifying many aspects of a person’s life.
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Your needs change as you age, and continuing to live in a house larger than you need is often an unrealistic expense motivated by sentimental factors. Not only does owning property require additional real estate planning, it also makes day-to-day expenses and travel issues more difficult to consider.
The layout of your home may have been fine when you were young, but in old age it may need serious and costly rebuilding. Cleaning can be difficult and stairs can be a daily dreadful obstacle to getting anything done. not).
Often the most important factors in deciding whether to rent or pay a mortgage are how long you plan to live in the house or rental and how much you are willing to pay. Renting should always be an option if you are moving to another area, a relative’s home, or an elderly residence in the relatively near future.
The decision to rent or buy in retirement is a personal one that only you can answer, but no matter what you do, your decision will cost you more with each retirement year. Candice Williams, a realtor at Coldwell Banker Realty in Houston, advises: dangerous. “
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