Is retirement on the horizon? Are the kids out of the house? (Have you checked the basement?) It might just be time to take a long look at your finances, then – especially those associated with your home. Here are a few ideas you might want to consider approaching:
Downsizing the House
If you have lived in your home for a long time, there is no doubt that you have become attached to it. For all of its leaks and bad plumbing and poor insulation, the thing has been a part of your family. What I am about to suggest, therefore, is none too easy. As you get older, it can become burdensome to maintain a space that you are not getting the most out of.
If you have one or two people living in a space built for four or five, you might very well fall into this category. Wouldn’t having fewer household chores and lower monthly payment ease the strain a bit? Downsizing to a smaller home with a more affordable price gives you more time and money with which to enjoy retirement. It is supposed to be enjoyable, right?
Apply For A Home Equity Loan
Unfortunately, it is all-too common for folks to retire without enough in the bank with which to live comfortably. This is often no fault of the retiree – it just happens to be getting tougher and tougher to retire with anything in the bank, given the economy and amount we all spend on housing, food, and gas.
If this is your situation, consider talking with a financial advisor about tapping into the equity you’ve accrued on your house. Your home, after all, is your most valuable asset, and it might be able to benefit you in more ways than just providing shelter and a cozy spot to watch DVDs.
What About a Reverse Mortgage
One way to turn some of that aforementioned equity into something you can actually use (cold, hard cash) is by taking out what is commonly referred to as a reverse mortgage. Just like a regular mortgage, you borrow money… and the similarities pretty much end there. With a reverse mortgage, you receive continual payments from a lender. Should you decide to sell your home, you then pay the lender back for each of those monthly checks that have come in. If you stay in your home, your estate will pay back the lender after you have passed on. It sounds ideal (and it can be), but keep in mind that a reverse mortgage does carry some costs, and it is always smart to consult with a financial advisor before taking out a loan like this.
Many people choose to maintain the status quo when they retire because it is just too difficult to think about doing anything else. Do not let this one go. As confusing and time consuming as it might be, these are the sorts of decisions that will make the difference between a worry-free retirement and a whole lot of unnecessary burden.
