If your children are out of the house and you have reached retirement age, you may need to reassess your finances, especially when it comes to your home. Here are a few things to keep in mind as you grow older.
Downsizing your house and your payments
It is easy to grow attached to a home you’ve had for awhile, especially if it is where your children grew up or you put a lot of work into it. But, at the same time, it can be quite tiring to maintain a large home that only you or you and your spouse are living in. And if you have already retired, you might find that it is more difficult to budget your money on a fixed income. If you are not using the space in your home and you are struggling with household chores and monthly payments, you might want to consider downsizing. If you sell your house, you can get a smaller house at a more affordable price, so you can better maintain it and your finances.
Using your home equity
If you are in retirement, you may find that, although you may not have a large income, you live in a valuable home. This means that your home may be one of your most important financial resources. In your older years, it may not be the best idea to use a home equity loan, but if you are an experienced investor, you might want to think about using your home equity for investments that could make you more than you’d be paying in interest and fees.
A reverse mortgage lets you turn the equity you have in your home into cash. Instead of borrowing money and repaying it to a lender, like with a standard mortgage, you receive payments from a lender. When you pass away or sell your home, the loan will be repaid. Getting a reverse mortgage does come with some costs, though. If you are interested, you might want to consult a financial planner. A professional can spell out the pros and cons of a reverse mortgage and help you decide if it is the right move for you.
You may also want to consider whether it is a good idea to even have a mortgage. Depending on your age and your financial and marital situation, it might be smarter to go ahead and pay off a mortgage or to simply pay rent.
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