There are five key financial resources everyone needs to consider when thinking about purchasing a retirement home.
Where can you find the money to finance your retirement home now? You may be surprised to learn you have more financial resources available to you at this point in your life than you think.
- Home Equity but dont indicate that its for the purchase of another home!
According to CoreLogic, homeowners across the country are gaining significant equity. Over the past year, the average homeowner gained $9,800 in equity, growing their overall net worth. If youre ready to sell your house and begin looking for your dream home, lets connect to plan how your equity can make this possible. - Stock Market real estate is also an asset.
Should you have all of your money in the stock market? The market has been performing well but perhaps some of that could be invested in your future retirement home. I remember another time when the stock market taught many of us a lesson. Diversified assets may be your answer. - Borrow from your 401K and pay it back plus interest within 5 years.
Some 401K plans allow you to borrow as much as 50% of your vested balance, up to a maximum of $50,000, within a 12-month period. This source could be the down payment on your future retirement home. - Withdraw the down payment from your 401K or IRA without penalty.
If you qualify as a first-time homebuyer, you can withdraw $10,000 to use as a down payment on a home without penalty. Combine this with todays historically low-interest rates and you can afford to buy your retirement home today. Yes, some retirees are first-time homebuyers, especially if they lived their entire adult life in a city like New York. The recent CARES Act allows for a hardship distribution of $100,000 without the 10% penalty, however, the distribution would be taxable at your ordinary-income rate. - Sell your vacation home to buy your retirement home.
Did you purchase a vacation home in The Poconos or Vermont as a family getaway? Now that the family is grown, is this place sitting empty most of the year? Why not sell and use the proceeds to buy your retirement home now. It just might make a great vacation home getaway until you retire.
Or, if you can qualify without selling your current home, take out a conventional mortgage. Rates are so low that it makes sense to finance your future retirement home now. Consult your financial advisor and your accountant; they may not agree with any of these suggestions, but this blog post gives you food for thought.
If youve been debating whether or not to sell your house and look at purchasing your retirement home, lets get together to discuss all of your options. Reach out to schedule an appointment. Be sure to check out are complimentary home valuation resource.