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Avoid These 5 Real Estate Mistakes as a Pre-Retiree
When heading into retirement, many people decide to downsize, relocate to a different community, or renovate an existing home. The thought of moving or making major home improvements often carries a lot of emotional attachment that can make these processes overwhelming. Here are five common mistakes to avoid:
1. Waiting to downsize – Many people wait to downsize until their kids graduate, but find that their children return and sometimes with children of their own. It could mean an 8 to 10-year extension on your time in a larger house.
2. Spending the windfall - If you’re able to downsize and make money from the sale of the home, carefully consider what you will do with it. For some people, it is best to live on the equity and leave retirement funds alone for a while, allowing Social Security benefits to increase.
3. Moving sight unseen - Before you move, research the locale. Find out about taxes, cost of living, access to the activities you enjoy, and healthcare options for the future. Make sure the community you’re considering moving to suits your lifestyle.
4. Maintaining two households - Maybe you think you’ll save money by buying a house at today’s prices and moving when you retire. Make sure you can afford the time and cost of payments, taxes, maintenance, and so forth for two homes. Factor in the cost of running two homes to see exactly how much you’ll gain or lose.
5. Holding a mortgage in retirement - Weigh the advantages and disadvantages of paying off your mortgage before retirement. You might be able to use that freed-up money to delay taking Social Security. Keep in mind that your tax deduction will not be as significant as it was at the start of the mortgage. If you’re thinking of taking on a new mortgage just before retiring because of today’s low rates, consider a short-term mortgage such as a 10-year mortgage. You probably don’t want to pay a mortgage when you’re in your 80s.
Source: Copyright Credit Union National Association Inc.
1. Waiting to downsize – Many people wait to downsize until their kids graduate, but find that their children return and sometimes with children of their own. It could mean an 8 to 10-year extension on your time in a larger house.
2. Spending the windfall - If you’re able to downsize and make money from the sale of the home, carefully consider what you will do with it. For some people, it is best to live on the equity and leave retirement funds alone for a while, allowing Social Security benefits to increase.
3. Moving sight unseen - Before you move, research the locale. Find out about taxes, cost of living, access to the activities you enjoy, and healthcare options for the future. Make sure the community you’re considering moving to suits your lifestyle.
4. Maintaining two households - Maybe you think you’ll save money by buying a house at today’s prices and moving when you retire. Make sure you can afford the time and cost of payments, taxes, maintenance, and so forth for two homes. Factor in the cost of running two homes to see exactly how much you’ll gain or lose.
5. Holding a mortgage in retirement - Weigh the advantages and disadvantages of paying off your mortgage before retirement. You might be able to use that freed-up money to delay taking Social Security. Keep in mind that your tax deduction will not be as significant as it was at the start of the mortgage. If you’re thinking of taking on a new mortgage just before retiring because of today’s low rates, consider a short-term mortgage such as a 10-year mortgage. You probably don’t want to pay a mortgage when you’re in your 80s.
Source: Copyright Credit Union National Association Inc.