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One of the decisions to make in retirement has to do with your home (that kind of home; not THE home). Will you stay in the same home, will you sell it, or will you move to a new neighborhood, city or state? These are just a few of the questions that arise related to the roof over your head.
My goal for retirement is to have a paid off mortgage so the financial aspect will not impact of the decisions we have to make. There are no doubt a multitude of options but I want to discuss four specifically.
Home Ownership. Although I don’t know if I will own one, two or zero homes in retirement, I don’t intend to have a mortgage. We may sell our home since it is a two story and I think a one-story would better suit advanced age at some point. We may replace this one with two smaller homes. One would be home base and the other a vacation base. We may decide to not own and I’ll discuss that option next.
Renting. One option Mr. Boomer and I may consider is renting instead of owning in our retirement. Although the cons include having a monthly payment that will increase over time there are attractive reasons to consider it.
Renting would mean you can take the equity in your home and use it now for a comfortable retirement rather than have a lot of money tied up in a house. Additionally, the maintenance is someone else’s problem and expense. Not owning the home makes it easier to pick up and relocate as well as take advantage of lengthy travel opportunities.
Mortgage. I can understand why some retirees have a mortgage. They might not have purchased a home in time to pay it off pre-retirement or had to use equity at some point for financial issues. If they have sufficient income and it’s less than renting, then at least you are building equity.
Reverse Mortgage. I have this last because it is the option I like the least. Mr. Boomer’s father has a reverse mortgage and the fees associated with this type of mortgage are high (close to 10% of the loan amount). Having said that, it is a viable solution for seniors with home equity but not enough income.
What kind of housing situation do you want for your retirement? Preparing for retirement starts now and the earlier you think about the decisions that have to be made the easier it will be.