That question concerns many. There are pros and cons of selling your home before retirement. You might want to keep the family house, but you might also want to stay close to friends, and your grandchildren. It is a time to explore your dreams. Your home might be blocking that freedom. This article enlists a few points that’ll help you make a better decision.
Selling home before retirement
There are various factors to consider when you decide whether you should keep or sell your home. You have lifestyle concerns on one side and financial issues on the other side.
Most people aged 65 don’t have enough savings to fund the retirement. Your home is probably your biggest asset that you can use to pay for traveling and other costs. Because of lifestyle concerns, you want a home that gives you the freedom to explore your dreams and also supports your physically.
Financial Side of Selling Your Home Before Retirement
According to the Merrill Lynch Study, people approaching retirement have approximately $100k in their retirement savings while the value of the house is double that value. If you’re in need of money, the house can fund the retirement.
Of course, you need to weigh down the choices. You can keep the home, turn it into a rental, create a rent-to-own strategy or choose to sell the property. Taxes can feel like a barrier to selling the house before retirement. However, if your home is your primary residence, you probably won’t have to pay the Capital Gains Tax. If you’re married, you can exclude up to $500,000.
When choosing to keep the house, do consider the cost of maintenance. Repairing and maintaining the home requires your attention, and of course, it costs money. You should also consider HOA charges and other expenses related to housing.
For selling the property, you should consider the cost of moving.
What do You Want in the Future Home?
What is the location of your current property? Are you living in the suburbs or the city? How many rooms do you have in the house? In other words, what is the market value of the property?
A house in the city costs more than the one located in the suburbs, even if it is smaller or has fewer rooms. When most people move homes, they are planning to downsize, but it’s not downsizing. A different community, amenities and other lifestyle facilities cost more than living in the suburbs. Moving into a smaller home might not be “downsizing” if you factor in all the expenses.
Furthermore, there is a cost associated with buying or selling a property. You might have to repair the house or stage it before selling. Don’t forget the realtor commissions, closing costs, and other selling expenses. All of this can add up to a hefty amount. If you want to complete a hassle-free sale of your property without paying for repairs or closing costs, please contact us.
The Pros and Cons of a Reverse Mortgage
A HELOC (Home Equity Line of Credit) similar to a reverse mortgage can provide you the needed income to travel and finance your retirement while keeping your property. Please consult a financial advisor to evaluate your options. A HELOC gives you access to a lump sum money, but you must pay it back within a limited time. You can choose to make a balloon payment or send loan installments. A reverse mortgage is different. You don’t have to pay it back unless you move out or sell the property. There are various mortgage products available in the market.
The point is to evaluate all options and then decide whether you should sell your home before retirement or not. If you need assistance, please call us for a free consultation. Our team representative will guide you further.