On the pages of our financial advisor you will find information on issues regarding:
- the Bulgarian banking system;
- opening a bank account;
- withdrawing cash;
- pension payment.
Many retirees are planning to access home equity, hoping it may make the difference between a comfortable retirement and just getting by. Through this pages we will help you consider some of the strategies for tapping home equity, such as moving to a more affordable residence or obtaining a reverse mortgage.
Before You Start
- Talk with your spouse or partner about using your home to help finance retirement. Are you in agreement?
- Consider whether your plans are realistic. For example, ask yourself whether you could really downsize to a smaller home.
- Begin looking into the cost-of-living implications that would be associated with moving to a different country.
- Check your most recent retirement account statement to determine whether you’re already contributing the maximum amount
Making a Move
Selling your existing home and relocating to a more affordable house or condominium may be a reasonable option if you have considerable home equity and the shift won’t negatively affect your lifestyle. As part of your research, remember to investigate the overall housing costs in your desired area. For example, real estate values and property taxes typically vary considerably by locale, sometimes even within the same state. Additionally, before relocating to a new area, you might want to spend significant time there to make sure it is compatible with your lifestyle and interests.
When calculating your home’s sale price as part of the retirement income equation, be sure to use realistic assumptions. Real estate prices have risen at above-average rates in recent years, and there is always the potential that they may level off or even decline in the future. When planning your retirement income, remember the importance of diversification – owning a portfolio of stocks, bonds, and cash investments in addition to home equity – to help guard against market swings in any one area, including real estate. Of course, there are no guarantees that a diversified portfolio will protect against overall financial losses, but a diversified portfolio can position you to potentially take advantage of gains in several financial sectors.
- Strategies for accessing home equity may include selling your house and moving to a smaller residence, relocating to a community where the cost of living is more affordable, or obtaining a reverse mortgage.
- Because real estate values may potentially level off or even decline, it’s important not to rely too much on the value of your home to finance your later years. Consider using home equity to supplement a diversified portfolio that includes stocks, bonds, and cash investments.
- Accessing home equity by selling your house may have the greatest appeal if you are able to find alternate housing without significantly compromising your lifestyle.
- A reverse mortgage may work for homeowners who have considerable home equity and want to remain in their current residence. Payout options typically include a lump sum, a line of credit, or an annuity-type schedule of payments.
- When evaluating reverse mortgages, review the fees and overall cost of borrowing (total interest paid over time), which may be considerable.