When you are retired and have less income to meet emergencies, take vacations, or handle a big-ticket repair, keep in mind that you have a ready source of cash at hand: your house. Your home is likely the largest financial asset you have. You can put your home equity to work for you.
You may have approached retirement with no plans to sell your home, especially if the mortgage is paid off. When you own free and clear your costs to live there are vastly reduced, although the taxes, repair and maintenance costs, and utilities bills go on. Your home is an asset that can be tapped to improve your quality of life. You should think carefully about how to use the value of it when doing financial planning and develop a strategy to access your home equity if you need the funds by either selling the home or borrowing against it.
When You Might Want To Sell
Does your home still work for you in your senior years? Is it where you want to be? Is it too big? Does it accommodate your physical needs? You may realize it is too big for you or not near enough to the kids. If your health is failing, you may need to consider assisted living or at least find a home that is a better fit to your needs. Selling the home will free up cash.
Thinking of relocating? If you move to less expensive home or condo, you could purchase with cash and have money left over to help fund your retirement.
Becoming a renter. This gives you the option to take all your home equity and invest it to produce a monthly income. You can also pay off any mortgage debt you may have. Plus you eliminate the ongoing expenses of property tax, repairs and maintenance.
When You Might Want to Borrow
If you aren’t ready to sell, you have alternatives that allow you access a lump sum of cash or an ongoing stream. Taking a home equity line of credit (HELOC) can offer you access to cash for emergencies. Assuming you qualify for a home equity loan, a HELOC is a good way to put on a new roof or take the trip of a lifetime.
If you need to supplement your monthly income, a reverse mortgage will pull cash from your home that does not have to paid back until you sell the house or pass away. You can choose either to receive a lump sum or monthly payments, or both. Your home equity is your money and having it in hand can relieve the stress of daily living.
Should You Access Your Home Equity?
The family home should be part of your retirement planning. Using the equity to improve your retirement years is something you have earned. There is no benefit to struggling financially while hundreds of thousands of dollars in equity sits unused in your home.
Roy Thomas SRES is a Senior’s Real Estate Specialist and a REALTOR® with Sutton Group-Professional Realty. Licensed since 1991, much of Roy’s practice is helping retirees with their later in life moves. Roy can be reached at 902-497-3031, by email: RoyThomas@RoyThomas.ca or online at www.HalifaxSeniorLiving.ca
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- Cleaning Out The Family Home
|Roy Thomas SRES® (Senior’s Real Estate Specialist) is a REALTOR® with Sutton Group Professional Realty. Since 1991 Roy specializes in helping retirees with their later in life real estate transactions. If you are contemplating a move and would like a complimentary copy of Roy’s guide to downsizing entitled “Preparing to Downsize” please click here|