Housing Options
Sell existing home and rent elsewhere
Advantages
- Your equity can be invested.
- Maintenance concerns decrease.
- Special facilities, such as a swimming pool or a medical center may be available.
Disadvantages
- There is less room for your possessions.
- Rent increases are likely.
- Proximity to neighbors may bring problems.
- The landlord may be hard to get along with.
- You can't participate in rising real estate values.
- The move may take you from friends.
Sell home to adult children, and rent from them
Advantages
- Your equity can be invested.
- You can keep your possessions.
- Your children will have an equity asset, associated tax benefits and good tenants.
- You will know the landlord well.
- It eliminates an appreciating asset from your estate with no corresponding gift tax.
- You don't have a leave friends.
Disadvantages
- Disagreements over rent, repair and improvements could harm family relationships.
- You may believe you are giving too much control to your children.
- You may feel too dependent on your children.
- You can't enjoy rising real estate values.
Reverse mortgage
This innovative financial program provides load advances (either as a one-time lump-sum advance to the homeowner or as a monthly payment for a fixed number of years). In most cases, the advances do not have to be repaid until the borrower dies, sells the home or permanently moves out of it.
Advantages
- A large part of your equity is available to invest for current or future income.
- You can keep your possessions with you.
- You don't have to leave friends.
- You maintain a high degree of independence.
- You don't need to pay back the loan until a later time (your death, sales of the home or your permanent move).
Disadvantages
- Psychologically it may be difficult to place debt against the home you have paid off.
- You may not free as much money as you would by selling the home.
- You could be forced to sell your home to pay off the mortgage if you move to a nursing home.
Rent your home
Advantages
- You retain control of the asset.
- You retain property tax and interest deductions.
- You can depreciate part of your investment, lowering your taxable income.
- You can enjoy your home's appreciation.
Disadvantages
- Mortgage payments, property taxes and expense costs may exceed the rental income.
- You will need to manage the property.
Sell home, buy smaller, less expensive residence
Advantages
- Your excess equity is available.
- Maintenance could be reduced so you can spend more time on planned retirement activities. If you buy a condominium, maintenance could be eliminated.
- The cost of home maintenance (property taxes, utilities, etc.) will be reduced, allowing you to stretch those retirement dollars.
- If you buy a condominium, it may be safer than a private residence. It may have special facilities, such as a pool or tennis courts, and you may have more neighbors your age.
- You retain the home's appreciation potential.
Disadvantages
- There is less room for your possessions.
- If you buy a condominium, you will have rules to follow and associations to join. Assessment fees can increase; you may not like close neighbors; and there may be pet restrictions.
- The move may take you from friends.