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Continued: Buying your first home after 40 brings additional financial considerations

  • Article by: ALEX VEIGA , AP Business Writer
  • Last update: July 31, 2013 - 5:45 PM

But it's doable.

Blayney recommends that even older borrowers who take on a 30-year mortgage take steps to pay off the loan or lower the monthly payment significantly by the time they retire.

That could mean making extra payments during the early years of the loan, or putting up more than the minimum down payment so the borrower is financing a smaller amount. A 15-year mortgage, which typically translates into lower interest, but higher monthly payments, is another route to a quicker loan payoff.

LOOK INTO FIRST-TIME BUYER ASSISTANCE

One of the biggest obstacles to homeownership is coming up with a down payment to qualify for a loan.

Federal and state housing agencies offer assistance for first-time homebuyers, including in many cases former homeowners who haven't owned a home for at least three years. You can find a list of some programs by state at www.hud.gov .

Remember though, while some loan programs allow homebuyers to make a down payment of as little as 3.5 percent of the purchase price, experts say you'll need to save enough for at least a 20 percent down payment in order to get the lowest interest rate and avoid having to pay private mortgage insurance, or PMI.

And they can come with hefty fees and restrictions.

ASK YOURSELF IF THIS IS THE RIGHT TIME TO BUY?

You may want to own a home, but are you financially ready to take on the financial commitment that comes with a home loan?

Experts recommend borrowers consider the implications of buying a home in their later years, as well as taking on a large loan

"This isn't the situation where if you happen to time your purchase incorrectly when you're 25 and you buy at the top of the market, you still have most of your life left to recover financially," says Rick Sharga, executive vice president at home auction site Auction.com.

CONSULT WITH A FINANCIAL PLANNER

Buying a home in midlife or beyond has direct implications on retirement.

Homeownership can bring stability to one's monthly housing costs, versus rental housing, as well as tax benefits, but it also carries with it a trove of costs, including property taxes, insurance and maintenance.

A good way to evaluate all the ways buying a home, whether in cash or through financing, will affect one's retirement finances is to enlist a financial planner to go over one's retirement goals.

"You have to sharpen your pencil, sit down and do all the math," Blayney says. "There's no one answer."

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