When you’ve lived somewhere for many years, it can be tough to say goodbye. But if you (or a loved one) currently have a home that is bigger than necessary or is too high maintenance, it may be time to trade unused square footage for a smaller, more manageable space and downsize your home.
Continue reading Downsize Your Home, Rightsize Your Life
Imagine the first place you lived as a young adult. Now imagine trying to fit your life today into that space. Not pretty, right?
For most of us, our housing needs are cyclical. A newly independent adult can find freedom and flexibility in even a tiny apartment. That same space, to a growing family, would feel stifling. For empty nesters, a large home with several unused bedrooms can become impractical to heat and clean. It’s no surprise that life transitions often trigger a home purchase.
Continue reading House Hunting? Don’t Forget these Lifestyle Considerations
A couple is planning to tour the United States in a travel trailer during their first few years of retirement. They are going to sell their current home now and purchase another home when they finish their travels.
An interesting exercise is to determine the optimum time for selling the home: now or when they’re ready to buy their replacement home.
Continue reading Optimum Time for Selling
With all of the encouragement from celebrity spokespersons like Fred Thompson, Robert Wagner and Henry Winkler, there is a growing awareness of reverse mortgages. The fact is that our population is getting older and more than 25 million homeowners meet the age requirement.
A reverse mortgage will allow homeowners age 62 or older currently living in their home to tap into their equity. The amount available is determined by the borrower’s age, the home’s current value and current interest rates. The loan proceeds can be received in a single, lump-sum or periodic payments. The closing costs can be paid in cash or rolled into the loan amount.
Planning for retirement is obviously important and many times, an activity plagued by procrastination. Some people plan to have their home paid for by that magical date so they won’t have payments after they retire. It makes sense to eliminate a large recurring expense before they quit working.
One strategy would be to be make regular principal contributions in addition to the payments so that it will eliminate the debt by the target retirement date.
Let’s say that a homeowner refinanced their $200,000 mortgage at 4% last year with the first payment due on May 1, 2012. Under normal amortization, the home would be paid for at the end of the term; 30 years in this example.
By making additional principal contributions with each payment, it would accelerate the payoff on the home. An extra $257.13 a month would pay off the mortgage in 20 years. $524.55 extra with each payment would pay off the loan in 15 years; and $796.23 would pay off the loan in 12 years.
Having a home paid for at retirement has the obvious benefit of no house payment. It is also a substantial asset that could be borrowed against or sold if unanticipated events should occur.
Another strategy might involve purchasing a smaller home now to use as a rental that you intend to live when you retire; see Retirement Home Now.
To make some projections to pay off your own mortgage, use this Equity Accelerator.