Most home buyers, particularly you first-time home buyers, do not understand that your home is so much more than just a home. When yo look at the property, you correctly see the amount of space you will have, the nearby shopping, schools, entertainment, etc. At this early stage, few of you are thinking of everything else that comes from home ownership.
Your home is:
Becoming a home owner is the first step to stabilizing the cost of housing. Buying with a fixed interest rate loan means you know what your monthly payments will be for the next 30 years.
-A Comfortable Retirement
After 30 years with the same mortgage, you have a home with a tiny fraction of the former monthly payment. Why a tiny fraction? Because property taxes and home maintenance will likely be your only expense. Property taxes have a 2% cap on how much San Diego county can raise your property taxes. So you can start thinking about your retirement.
-Options In Retirement
At this point, you have several options. You can downsize to a smaller house. This is particularly appealing to owners of homes with more than one level. The difference in price can become part of your retirement nest egg. Some people want to buy their dream home now that the kids have moved out. Being retired does not prevent them from qualifying for a loan. A reverse mortgage on your next home can help you overcome lack of earned income and any blemishes on your credit. Perhaps you want to stay in the home but need to supplement your social security and savings. A gift annuity can help you do all this even if you still have some portion of the mortgage remaining on the home.
-Not A Cash Machine
The one mistake to avoid throughout the ownership is to think of the property as a cash machine. The equity you are building up over time needs to “for later”. Over the years, your home will appreciate in value and your ownership portion of the home will increase as you pay down your mortgage. Do not make the same mistake as so many baby boomers. Do not be tempted to live beyond your work income by refinancing the home to take cash out. This move will severely diminish any return when it comes time to retire.
Even with the tax reform of 2017, there are still tax advantages to having a mortgage. These write-offs will help you build wealth over the years.
To discuss any part of this and how you can maximize your retirement benefit, call/text me at 760 622 5087 for an appointment.