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Debunking 7 Common Myths About Retirement and Real Estate

Retirement planning often comes with a multitude of myths and misconceptions, especially when it comes to your real estate. Many people believe they have to follow certain rules or take specific actions regarding their property in order to retire comfortably. However, these beliefs can often be unfounded or outdated. Let’s debunk seven common myths surrounding retirement and real estate:

 

Myth 1: I have to pay off my mortgage to retire.

It’s a common misconception that retiring with a mortgage is a financial burden. While having a mortgage in retirement can impact your cash flow, it doesn’t necessarily mean you can’t retire. It’s essential to consider your overall financial situation, including retirement savings, income sources, and expenses, to determine if carrying a mortgage into retirement is feasible for you.

Myth 2: I have to move out of state to retire.

While some choose to relocate for various reasons, such as lower living costs or better climate, it’s not a requirement for retirement. Many people find fulfillment and comfort in staying in their current community or even downsizing to a smaller home nearby. The key is to assess your priorities and choose the option that aligns best with your lifestyle and financial goals.

Myth 3: I have to sell before I can buy another home.

Downsizing or upsizing in retirement is a common consideration, but it doesn’t always require selling your current home first. Depending on your financial situation and goals, you may have options such as using home equity, securing a bridge loan, or coordinating a simultaneous sale and purchase. Exploring these alternatives with a financial advisor and a licensed real estate professional can help you make informed decisions.

Myth 4: I can’t qualify for a mortgage once I retire.

While it’s true that lenders may assess retirement income differently than traditional employment income, many retirees can still qualify for mortgages. Factors such as retirement savings, pension income, Social Security benefits, and investment dividends can all be considered in mortgage eligibility assessments.

two blue chairs on the beach to symbolize retirement
traditional style home with bricks

Myth 5: It will take me forever to get my house ready to list.

Preparing a home for sale can be time-consuming, but it doesn’t have to be a daunting task. With proper planning and assistance from real estate professionals, you can streamline the process and maximize your home’s market potential. Simple improvements, decluttering, and strategic staging can often make a significant difference in attracting buyers without extensive time or expense.

Myth 6: I can’t work at all once I collect social security.

While there are limitations on how much you can earn without affecting your Social Security benefits if you start collecting before full retirement age, it doesn’t mean you can’t work at all. Once you reach full retirement age, there are no restrictions on your earnings, and even before that, you can earn up to a certain limit without impacting your benefits. Many retirees choose to continue working part-time or pursue fulfilling hobbies to supplement their income and stay active.

Myth 7: I have to sell my house to retire since I can’t afford my mortgage, but I have equity.

Having equity in your home can be a valuable asset in retirement planning. Instead of automatically selling your home to alleviate mortgage payments, consider alternative strategies such as refinancing, downsizing, or leveraging your home equity through options like a home equity line of credit (HELOC) or a reverse mortgage. These alternatives allow you to access your home’s equity while still retaining ownership and residence.

 

Retirement and real estate decisions should be based on individual circumstances, goals, and financial considerations rather than misconceptions or one-size-fits-all rules. Please contact a licensed financial advisor and a mortgage lender to discuss all of your options. We have a list of trusted advisors and lenders in the southeast King County area, please let us know if you need a recommendation. Contact us to make sure you get the most out of your real estate.

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