Have you been putting off retiring because of the economy and reduced income?
Were you making plans just a few years ago to get ready to retire and find that you are saddled with a too large of a house or mortgage, or even worse, an underwater mortgage?
Or are you afraid to build that retirement home until you sell your present home?
With the economy improving slowly, it is hard to make any definite plans or drastic changes, unless you approach your goals and problems in a less traditional manner.
In better times you could use the equity in your home to get a Building Loan for new construction, complete the new (usually smaller) house, move in and sell your home of many years within a few months. Now the homes aren’t selling well or you have to take a loss.
If you have equity in your house, a Home Equity Loan would provide the resources to begin construction of a retirement home or maybe even the cost of the entire project. You could live in your home until the retirement home is complete. Then, instead of trying to sell it, you can lease or rent it out, for at least as much as the payments on the equity loan, plus some, or even more if the market will bear it.
Since many people have lost their homes all over the country, they need other places to live. Though some are homeless, the majority are renting. They have not all lost their jobs. If the unemployment rate is 8.2%, it means that 91.8% of the work force is still working! Many foreclosures were due to impossible terms like interest rates jumping from 4% to 13%, thereby increasing the homeowner’s payment. In some cases there was a balloon payment they were not able to meet.
If your plans are to retire far from where you live now, it may be difficult to manage a property and renters from a distance. A property manager through a local real estate office might relieve you of that burden for a small fee and you know your property is being taken care of.
Home prices will rise again, though probably not as high as they were during the bubble. Since your house was meant to be an investment for future retirement, let it continue to be that plus provide some income.
This mini-Colonial is just around 1,000 sq. ft of living area with a detached garage in the back, which was built a year after the house. This family had been living in a larger house on a canal. Between rising property taxes and the son going off to college they decided to give themselves a head start on their retirement and built this gem in a modest subdivision and sold the canal home.