As with any home across the nation, an Indiana home is a good long-term investment. Our current economy makes certain areas in the Indianapolis real estate market perhaps questionable in the short-term, but over the long haul, investing in an Indianapolis home is a sound investment. Perhaps in fewer populations is this more important than those facing retirement.
Some Indianapolis retirees grow to depend on their home equity for retirement and to support them through their latter years. Certainly, a Hoosier‘s best-case scenario would be to have enough money invested in other places that would make tapping into their homes’ equity be a last resort. However, many times, unexpected expenses and health issues will make this an option many turn to.
To gain access to this home equity for retirement, homeowners look at options like home equity loans, home equity lines of credit and reverse mortgages. They may also consider selling a current residence and moving into a lower priced home to utilize the financial difference gained.
When considering tapping into the equity of your home for future expenses, first think about the following:
If you are married, do you and your partner agree to use your home equity for retirement?
Do you have a realistic impression of what you can gain from your home or is moving to a smaller residence is reasonable?
If you’re considering relocation to another part of the country, have you factored in the different costs of living?
Have you checked with your financial advisor to see what all of your other options are before tapping into your equity?
After asking you and your family these questions, if using your home’s equity to help finance your retirement is still a viable option, one of the first steps you will need to consider is how you will gain its resources. One option is a home equity loan which is given to you in a lump sum and needs to be repaid, like other similar loans.
A home equity line of credit works more like a credit card where you are approved for a certain amount that you can tap into as needed. An important factor to consider with this option is that the credit line could be lowered on you without much notice.
If you consider a reverse mortgage, a payment will be given to you basically in exchange for the ownership of your home. While this option and all of its ramifications needs to be carefully considered, it has remained a popular option for some retirees because of tax-free payouts. There are options of how to gain this equity including as a credit line, on a payment schedule or as a lump sum.
Using the equity gained in a home when exchanging for a smaller or less expensive residence is also a popular choice for retirees. Often times, it becomes an inevitable option for some as taking care of larger residences and landscaping becomes too big of a chore.
When considering this option, it’s important to work with an Indianapolis REALTOR® who can look at other Indianapolis home for sale currently and give you an accurate impression of what your home is worth. Making a decision based on this information will be important, rather than basing it on what you think, or hope, your home may be worth.
Still, looking at these options in depth may be most realistic when actually facing retirement. Home values, especially in the roller coaster of our current economy, will rise and fall so to depend on the equity in your home for the distant future can have risks.