By Erica Sweeney
Dec 3, 2021
Once you hit the half-century mark, you’ve likely accumulated a passel of belongings, some decent savings, and, quite possibly, some hard-earned real estate wisdom. But when it comes to buying a new home in your 50s, the process is quite different from any other time in your life precisely because you’re at a midpoint—in homeownership.
“When 50-somethings consider buying a house, they are usually looking at two transactions: selling what they have and purchasing a replacement home,” says Anthony Carr, associate broker at Re/Max West End in Falls Church, VA.
Selling and buying real estate concurrently, all with an eye toward a new stage of your life, may bring a host of stressful challenges. We’re here to help you navigate the process with the top considerations for quinquagenarians (aka those aged 50 to 59) who are planning to buy a new home.
Decide what to do with your existing home
“Some of the concern with 50-somethings is timing. You want to make sure you can sell, find another house, get it under contract, and close on your next home on time,” says Carr.
You can help control this timeline by adding a “home of choice clause” when you list your current property. This means that unless you find a house you want to buy before the sale closes on your current home, you can call off the deal, according to Carr.
If you can afford it, you could purchase a new home before listing your existing property. Going this route gives you more flexibility, but you’ll have to make two mortgage payments until your old home sells.
Another option? Keep your first home and turn it into a rental property to generate income.
Think about downsizing
Your 50s might be the perfect time to downsize. So thinking about what the next decade will look like for you and your family is crucial. If you have kids at home, try to parse out how much longer they’ll be living with you.
You may want a multigenerational-family residence to accommodate your adult children or aging parents. Or you might prefer a scaled-down dwelling such as a condo in a location where you plan to retire.
“Approaching and planning for retirement might be a good financial reason to downsize,” says Trevor Halpern, founder of Halpern Residential at North&Co. in Phoenix. “Becoming an empty nester may also be a good reason.”
A smaller, less expensive home can free up cash, which you could also use to fund college tuition or future health care costs.
Keep in mind downsizing can be challenging. Carr’s seen several 50-something buyers think they’re ready to downsize only to find they aren’t ready to let go.
“They become accustomed to a certain standard of living,” he says.
Study your present and future bank account
“Some of the potential challenges and downsides to purchasing a home in your 50s are often financial,” says Halpern. “Although many people in their 50s have a good handle on their finances, sometimes life throws a curveball at you.”
Be sure to have a clear picture of what you can comfortably afford now—and down the line when your earning power may decrease. You’ll want to be able to maintain your new mortgage payments and home maintenance in case you face unexpected hardship. And factor your retirement goals into your decision.
Consider using your current home’s equity
If you’ve lived in your home for several years, you may be able to tap into some of that built-up equity through a cash-out refinance, says Halpern. A cash-out refinance enables you to borrow more than you owe on the mortgage and keep the difference.
“Many lenders have loan programs where you can peel out some equity from your primary residence to purchase a second home for pre-retirement, investment, or even a vacation dwelling,” says Carr.
The benefits of cashing in on your equity is an individual decision based on many personal factors and goals. But it’s always a good idea to talk to a financial expert first.
“It’s easy to get pulled into the idea of freeing up equity,” says Halpern. “But it’s of utmost importance to make sure it is the best long-term financial move for you.”
Don’t rush to make a decision
“By the time you hit the 50 zone, knowing what you want to buy, and how you’re going to make it happen, is a lot easier to absorb than on your first home purchase,” says Carr.
This means you usually have time to find the home that’s the best fit for you.
“I always recommend buyers in their 50s take their time,” says Halpern. “Line up all your ducks, and look at your situation holistically.”
Most buyers in their 50s who purchased a new home in the past year did so either to be closer to family and friends, to live in a more desirable neighborhood, or because of a change in a family situation, according to the National Association of Realtors®. So you may even want to consider taking the time to search in a different city or town.
“You’re at that point in your life where you may just be able to make such a move happen,” says Halpern.