4 Ways to Grow Your Home Equity Before Retirement
If your retirement is approaching and you own a home, chances are it will play a significant role in your post-career plans. Whether you’re staying put, downsizing or considering supplementing your finances with a Home Equity Conversion Mortgage (HECM), the equity you have in the property matters.
Even if retirement is closer than you care to admit, it’s not too late for one final push to maximize your home’s equity before putting your long-term plans into place. Consider focusing on these four strategies to make the most of one of your most valuable assets.
With interest rates near historic lows, refinancing your current mortgage could add a much-needed boost to your equity growth. While taking advantage of a lower rate can cut your costs, pairing it with a shorter loan term could allow you to pay down the principal faster, with only a minimal impact on your monthly budget.
Even when refinancing doesn’t make sense for your situation, there’s still a simple solution. With just a few years left before retirement, it’s a perfect time to take a fresh look at your budget and reconsider your priorities. A few sacrifices now could free up extra cash to put toward your monthly mortgage payment, paying off exponentially. Just remember to check with your current lender to make sure your additional payments are being applied correctly to lower your loan principal.
Retirees planning to remain in their current home may have additional interest in upgrading their way to more equity. Older homes in high-demand neighborhoods can benefit from a smart remodeling plan. Big projects like kitchen and bath upgrades or adding square footage could provide a substantial return on the investment. More affordable improvements focused on curb appeal and home maintenance could also add dollars to your bottom line. And even if a ‘For Sale’ sign is in your future, renovating can be a way to squeeze even more value out of your current home.
Plans for downsizing, escaping to warmer weather or closing the gap between you and loved ones don’t necessarily have to wait until retirement day. Keeping an eye on mortgage and real estate trends may present an opportunity to fast-track part of your retirement plans and save money. Snagging your dream property now, and relying on a temporary downsize or rental in your current location, can give you a head start on building equity in your next home while minimizing the risk of having economic fluctuations derail your dream retirement.
Find out how Open Mortgage can smooth your path to retirement with mortgage options tailored for your goals. Call today to speak with an origination specialist, or visit OpenMortgage.com.