Your Home and Your Retirement (Summary)

by The Real Estate Faction on March 10, 2011

Summary
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.
Checklist
Read the fine print before signing any type of reverse mortgage, paying particular attention to details about fees and expenses.
Reinvigorate your traditional retirement saving initiatives by maximizing contributions to your workplace plans and/or IRAs.
If a reverse mortgage will make it impossible for you to pass along the full value of your home to an heir or heirs, consider revising your estate plan accordingly.
Don’t base long-term financial plans on the assumption that your home will maintain or surpass its current value.
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