How To Use Your Home To Secure Your Future

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Retirement, what is that? If that is your response, and you are already in your 30's or more, it is time to start thinking about your financial future and planning accordingly. If you are a US citizen and are contributing towards social security from your paycheck, so yes, you will get a monthly payment upon retirement, but that won't likely be enough to maintain the lifestyle you've been used to, so it is wise to think about investments, savings and more. This article is an introduction to some of these ideas, as specifically how to use the home you hopefully own in a way that helps secure your financial future. Ever heard of a reverse mortgage, not to sorry, me neither! So, put down the paint brush for just a minute, and read on!

Securing your future financially can involve many strategies, investment approaches, savings plans, and spending arrangements. Planning for your and your family’s financial future takes thought, multiple approaches, creativity, and as an end-result, money. Experts often put a figure of $500,000 in savings or investments to secure a worry-free future, and some senior advocates such as  AARP put that figure closer to $2 million for a successful retirement at age 67.

As retirement, like most other things in today’s world seems to be getting more expensive, many retirement-conscious Americans are tailoring their strategies to bring in money beyond traditional retirement funds, and often their go-to source is the most valuable item most of us have at our disposal – our homes. Our home may be our treasure, but it can also be a burden.

Owning a home can cost you money, but it can also make you money. Taxes, insurance, utilities, maintenance, upgrades and all the day-to-day operation expenses all add up. However, there are many ways to use your home to insulate yourself against costs and fit a retirement plan.

Your home as an income source

You can use your home as an income source. Some outside-the-box approaches to income property include building on a rental suite. This could be a basement, a garage, or several rooms inside, but you must adhere to local zoning, property and business laws, and could cost a large investment to make it rentable.

The same strategy, but an easier road is renting out a room or two, and you may have to swap your own accommodations for your renter’s – they get the master bedroom with bathroom and you go to a junior room. That isn’t necessary, but it could make for an easier (and larger) rent. You may not need much of a cash outlay to accomplish this.

You could start up a bed and breakfast, especially on weekends or during a local tourist season, if you can cook, clean up and be resident managers for your guests. It may be more of an undertaking than just cooking breakfast, but it IS a potential moneymaker.

Other outside-the-box strategies include renting out storage space or vehicle parking; growing fruits and vegetables on your property and selling the harvest to local markets or at farmers markets; and many people hold events or parties at their homes for cover charges or entrance fees but inviting hordes of strangers into your home may not be the most secure approach.

Buy something smaller

One tactic might be downsizing or selling your home and buying something smaller and less expensive. If you have enough equity to pay fully for your smaller home, you can gain cash and lower costs, or if your home equity does not cover it, you might still be able to wind up with lower monthly costs from the less-expensive home.

Refinancing your home for cash

If you plan on staying in your familiar and comfortable home, one popular strategy for making your home pay for itself and build funds for your future is refinancing. The first advantage is that if lower interest rates are available, you can save money on the monthly payments with a lower percentage of interest. If a shorter term is negotiated, you can pay off your property quicker and spend less per month to accomplish it.

If a home refinance instrument utilizes your debt equity, you could still wind up with a lower monthly rate and a quicker pay-off and still wind up with equity cash to invest elsewhere, pay off other debt, put in the bank, or use as you wish. You save money and have extra money at the same time.

Utilizing a reverse mortgage

If, however, you want to downsize your debt load, another strategy is to benefit from the value of your home, eliminate mortgage debt, gain a cash infusion, and continue to live in your home as you did before. This strategy is utilizing a reverse mortgage option.

A reverse mortgage works exclusively for senior homeowners, age 62 and older who have a substantial equity in their property, a reverse mortgage may be a strong course of action. In reverse mortgage loan situations, the home must be the borrower’s primary residence and the home becomes collateral for the loan. The borrower must remain in the home for as long as they have the loan, but the loan money is tax-free and typically, there is no monthly payment due.

The borrowers will continue to pay for their home insurance and property taxes, and there are several ways to gain tax advantages and even pay off the reverse mortgage without penalty if they choose. Otherwise, no payment is required until the last surviving homeowner moves, dies, or sells the home.

Currently more than 1.21 million households have utilized an FHA-insured reverse mortgage to help meet their financial needs. It may be an essential part of your creative, outside-the-box approach to securing your financial future. To get an idea of how much you can qualify for we recommend using ARLO’s free calculator.