Using Your Home’s Equity
- Housing prices fluctuate, so don’t depend on it for your retirement savings.
- If possible, pay off your mortgage before you retire.
- Create other retirement savings and plans so you do not need to use your home’s equity for living expenses.
- Evaluate reverse mortgages and home equity loans carefully to understand charges, fees and payment schedules fully.
- Seek advice from a qualified financial planner before using your home as a source of income for retirement.
According to the Consumer Financial Protection Bureau, older homeowners with a mortgage spent about $1,200 a month on housing. Homeowners with no mortgage spent about $400. If you have a mortgage when you enter retirement, where will you find the additional $800 per month?
Your home is your castle, your sanctuary, where you raise your family and where you make memories for a lifetime. But the costs of homeownership needs to be weighed against the benefits as you enter retirement. Retirement can mean downsizing, moving to a rental property or even using your home as a source of income.
Your housing decisions can affect your income stream in retirement, so you need a plan.
What Are Your Beliefs About Homeownership?
When you think about your home, what beliefs do you bring with you?
- How important is it to you and your family that you own your home?
- Who will maintain your home as you age? How will you pay for it?
- What or who would affect your decision to stay in your home?