Yes, you should certainly consult a bank but don’t completely rely on the bank. Yes, most banks will provide mortgage loans to seniors who are downsizing, but that doesn’t necessarily mean they have your best interests at heart. Sometimes, banks will tell you that you can afford a lot more than you actually can, just so you accept the offer—putting you at risk of potential debt. Not how you pictured living out your golden years, is it? Rather, make sure you have an accurate budget, including all your monthly (as well as biweekly, seasonal, and annual) expenses, being as comprehensive as possible. Don’t count your current mortgage, however. Subtract your total expenses from your net income to get a fairly accurate idea of how much you can afford. If this task seems a bit overwhelming for you, ask someone you know who has a knack for number crunching for some help. Online mortgage calculators are also a fantastic tool to help you, though if you don’t feel comfortable finding your way around the Internet, ask someone to help you. Besides your budget, you should know your current credit score. Perhaps you haven’t looked into your credit score in years, or maybe you’ve never known or remembered it. Regardless, now that you’re selling one home and buying another to better suit your new needs in this next chapter of your life, it’s time to learn your credit score! For example, if you try to apply for a mortgage for your new home without checking your score, you could end up paying a lot more than expected. It’s best to get this done before you start the downsizing process so you can resolve any credit-related issues.
MISTAKE #2: FORGETTING HIDDEN COSTS
Don’t make the common buyer mistake—which applies to all types of buyers—of disregarding so-called “hidden” costs involved with purchasing a home. Closing costs are probably the biggest (and best) example of this, as they can include a lot of
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