From the past ten years, the cost of living rises at the fastest pace, which can make a scary future for retirees with a steady salary.
Are you concerned about your ability to handle expenses after retirement? Or, you may not have enough savings to use after retirement.
Well, if you own a house, you can use your home equity for retirement income. Most of the retired individuals of ages between 65 to 85 years have more home equity as compared to liquid financial assets. And, this home equity offers retirees a great option to plan retirement income.
You can convert home equity into retirement income, cash, and financial leverage. This will help you to improve your overall wealth and offers long-term care you need after retirement. However, using home equity for retirement income is one of the best ways for financial stability.
Keep on reading to know the best ways of using your home equity for retirement income.
How to Use Home Equity for Retirement Income?
Most people who are retired or at the corner of retirement looking for some alternatives to create adequate retirement income. And, for extra retirement income, tapping into home equity could be beneficial for you.
There are five ways of using home equity for retirement income. Have a look!
#1 Downsize Your House into a Small Home
Now when the kids have moved out, you do not need a big house, you can live comfortably in a home with two or three rooms. Perhaps you’ll find near your locality, in a retirement community, or can buy a house closer to your kids.
Once you have sold your large home, you get excess of money in your account. Now, you can use some part of that cash for buying a small house with no mortgage to pay. Also, you can use the excess home equity for your future needs. Thus, downsize your home will help you with retirement income.
#2 Rent Out Space for Retirement Income
If you don’t want to downsize because you love your place then, rent out a room or some portion o your home is a great choice. You can rent to a graduate student, family, medical resident, and anyone you can trust.
Use online sources and offline adds to reach out among people who need space at rent. The money you get from rent will work as retirement income for you.
#3 Sell Your Old Home and Move In With Your Kids
If you own your home’s outright or have home equity, selling it could produce the influx of funds for your retirement needs.
Families often live in multi-generational homes drive-by grown kids moving in with their parents. Whether you live in a basement or the extra bedroom, living together with kids and family will be beneficial for you as well as your kids.
Young parents appreciate your help with grandkids. Being grandparents, you can pick up kids at school, music class or a dance class. Apart from the financial benefit, there are emotional benefits as well in living with family.
#4 Sell Your House and Move to an Inexpensive Place
One way to get more retirement income is to sell your home and move to an inexpensive state. Move to place with less cost of living in terms of essential expenses including, accommodation, taxes, clothing, food, and health care.
By doing so, you can save a large amount from your monthly expenses and can improve your retirement income.
#5 Take Out a Reverse Mortgage
A reverse mortgage is a type of home loan for 65 and older which converts your home equity into cash while allowing you to live in your house.
This financial product is available to all older Americans who have accumulated home equity and want to use this home equity for retirement income. Also, unlike other mortgages, you do not need to pay any loan payments until you die or move away.
There are different types of reverse mortgage solutions. However, FHA-insured Home Equity Conversion Mortgage (HECM) is the most popular reverse mortgage.
Plan happy retirement with using home equity for retirement income. You can use your home equity in any of the above ways. But, if you love your house and want to live in it until you pass away, then a reverse mortgage is an excellent option for you. It can provide you a significant retirement income, which you can use in any way you want.
An average amount that you can get from a reverse mortgage is about 50 percent of your home’s present value. It needs to be evaluated carefully with the help of a professional adviser like Brett. So, contact Brett because RM can be complicated, and Brett can help sort through your situation.