Wednesday, November 2, 2011

Should You Buy a Home if You May Inherit One?


Homeownership can be an acquired taste. There are positive aspects in certain situations and for certain people, but I question whether many of the benefits that people list are really as great as they seem. And many of these same people remind us non-homeowners of the day that will come when a home is paid for and no longer such a burden upon the old pocketbook.

But there are still those holdouts like myself (even though I’ve owned a home for a brief, three year stint), who don’t feel they particularly need or want a home. We want to be free to travel and explore the country. Yet, in the back of my mind, a little voice keeps nagging at me saying, “Wouldn’t a home be nice to have in old age or when you retire?”

Part of me agrees with this voice. But then another voice chimes in and says, “If you buy now, by the time you have your home paid off, you may have inherited a home from your mother.” And while I don’t expect this or count on it, since many things can change in the next 20 to 30 years, it is something to consider.

So if you aren’t big on the whole homeownership idea, but may inherit a home by the time you’re ready to retire; is it worth buying your own?

The Baby Boomer Generation
Many boomers own or may soon be paying off homes as they near retirement. Several of my boomer relatives either own outright or are working toward paying off their homes as they close upon their golden years. While I don’t expect to inherit homes from all of them, there is a good chance that one day down the road I could, so in some ways I’d almost rather help maintain and keep up their particular properties than have to buy one of my own to maintain.

Carrying Costs
There is no denying that homes can get costly; and no matter how much you plan and prepare for homeownership, it’s near impossible to take into account every costly situation you might encounter with a property over the years. Rather than dumping money into a property as I have done previously, why not let someone who loves living in a home maintain and care for it, especially if they may one day leave it to you?

I know such reasoning might sound somewhat harsh, but it’s also logical. A home must be passed along to someone, and it’s not as if you’re knocking off a loved one to get it. But if you have reasonable expectations of receiving a home one day by way of an estate, and you really don’t care for the thought of owning and maintaining one over the next 30 years or so, it’s a logical line of reasoning to undertake.

Why should you and a relative or loved one each pay property taxes, maintenance, and all the rest on a home for the next 30 years if you don’t really need to, and when eventually you would have to sell one (or even both homes) eventually anyway?

Freedom to Move and Explore
Choosing to avoid homeownership with the chance of inheriting a home in the future, could also provide a chance to move and explore without the hindrance a home. Not having to worry about upkeep and maintenance while you are away for long periods of time, or having to go through the sales process each time you want to move, can be a weight lifted from your shoulders.

My wife and I have moved multiple times over the last decade and have found that it is much easier, quicker and cheaper to do so without having to sell a home.

Principal Considerations
Not everything might be coming up roses however in a scenario in which you might be expecting to one day inherit a home. In our case, one set of relatives has a second mortgage on a home, which means that should that set of mortgages still remain at the time of their passing, rather than inheriting a home paid in full, we could be straddled with additional debt.

The amount of principal -- or debt -- a home you might one day expect to inherit carries is another factor that may likely have to be considered in such planning. Whether a home is paid off, still carries a mortgage (or two), or has a home equity line of credit, reverse mortgage or a lien of some sort attached, might affect your decision as to whether or not it’s wise to purchase a home of your own and work toward paying it off regardless of what an inherited home might bring.

Can’t Count on it
Maybe the greatest factors of all to consider when deciding if it is wise to buy a home if you may inherit one, is that it is extremely difficult -- even with all the planning and preparation -- to ready ourselves for what the future may bring. A relative might change their will, they may encounter unexpected health or financial issues, or you might pass away before them.

This means that with all the planning, hoping or expecting, you may be left on your own when it comes to eventually tackling the housing situation. While this won’t sway me one way or the other when it comes to how I feel about homeownership, I do think it is something important to consider when it comes to an inheritance and could alter the way others could or should see the possibility of being left a home by way of a benefactor.

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