Live wearing costume (7)

I believe the answer is:

inhabit

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'live' is the definition.
(I know that live can be written as inhabit)

'wearing costume' is the wordplay.
'wearing' becomes 'in' (in jeans or in a dress).
'costume' becomes 'habit' (I can't explain this - if you can you should believe this answer much more).
'in'+'habit'='INHABIT'

Can you help me to learn more?

(Other definitions for inhabit that I've seen before include "Live in (a place)" , "Occupy - settle" , "Occupy (dwelling)" , "people" , "Live in, occupy" .)

I've seen this clue in The Mirror.

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