If you are a homeowner, there is a good chance that your equity has increased in the past year. Soaring home prices caused by a pandemic-fueled real estate frenzy has led to a scenario where homeowners in the United States are sitting on a record $ 22.7 trillion of home equity, according to a new report. their home, according to Real Estate Equity Exchange.
Watching your home’s estimated value increase on real estate websites can be exciting, especially if you’re relying on that money to someday help you fund your retirement lifestyle. But it’s important to remember that real estate is a more complicated asset than cash. Keep these factors in mind when considering how the value of your home can be used to fund your retirement.
1. You need a place to live. Whether it’s in your current home or elsewhere, you need a roof over your head, and it usually comes at a significant cost. Many people who downsize their homes underestimate how much they will end up spending on a smaller condo or on living in a retirement community. In fact, some eventually find that their new home is comparable or even more expensive than their old home – especially since they may spend two or three decades in retirement there. Whatever your situation, do the math to find out what you’re getting into financially and how that will be factored into your retirement plans.
2. Selling your home might not be as easy as you think. With the high demand and shortage of homes on the market, you may see homes selling at lightning speed in your local community, but it’s important to remember that there are has no warranty. In some parts of the country, hot real estate markets are starting to cool. Therefore, you might be disappointed with the price you are able to generate when you sell your property. Many people have been disappointed to find that their home is not as valuable as they might have expected. It’s important to keep the pulse of the housing market in your area to help you determine what you might get for your home.