Buying a house can be the starting point for most people in securing a solid financial status. If you already have a house or deciding on taking a step towards getting one, then you should give yourself a pat on the back. However, It is not necessarily a simple process though and it can be very scary for first-time home buyers. Buying a house has its advantages but also has disadvantages. There are certain mistakes though that people make unknowingly that will affect them in the future. In this article we have unfolded some of these mistakes so that you can avoid them.
#1. Buying a house outside your price range
Owning a house is the biggest expense home owners have when they get to the retirement age. When you have a large house, maintaining the property takes a greater toll on your retirement savings. If you decide on getting a house, future income should be taken into consideration before deciding on the kind of house you want.
#2. Draining retirement accounts for a down payment
While it may sound tempting at the moment to use part of your retirement money to settle down payment of the house, you will find out that there is little or no money left when you retire. It is called a retirement account for a good reason and should be left that way.
#3. Paying off your mortgage too quickly
It sounds impressive paying your mortgage in less than 3 years and you will be merry over it but it’s not always the best thing to do. You may be glad to get rid of your debt but there are good and bad debts. Down payments, utility bills etc are bad debts that you should not hold unto. Mortgage on the other hand is a good debt and you can easily pay by making minimum monthly deposits then invest your money to get higher returns.
#4. Not saving for the rainy day
This situation happens more often than you’d expect and it’s such a sad situation. Alot of people fail to set up an emergency fund. If you happen to fall in this group, you will face great difficulties when you retire by having no constant source of income.
#5. Waiting too long to downsize
A million dollar house makes sense if you have a large family with all the kids around but when they all start going off to college, its high time to move into a smaller house. A huge house has lots of expenses which you may find hard to maintain as a retired individual. You and don’t expect your kids to move back in when they finish college; unless you have budgeted for a boomerang child, try getting a smaller place that will reduce on your spending.
At a retirement stage, you want little or no stress to be hanging over your head but you will not enjoy laxity if you have a cloud of expense hovering over you everywhere you go. Therefore make hay while the sun shines by getting rid of all large expenditure before its too late.