Retiring in Alaska? How to Make your Home Work for You
You’ve spent years working hard and saving and planning for the time when you can finally retire. Think of all the amazing things you can use your time to do here when retiring in Alaska. You own your home and now you’re hoping that investment will pay off during your retirement. How do you make sure that your home works for you as an investment and not against you as a liability?
How do you know if your home is your greatest asset?
While you are working most of your adult life to pay off your home, you find yourself dreaming of the day when you will be mortgage-free and enjoying life to the fullest, possibly even retiring in Alaska! Home ownership is generally a smart investment, because of the equity that can build up over the years. Eventually you can pass your home on to your heirs, and they can reduce capital gains taxes if they sell it.
Your home is an asset when it benefits you after years of ownership. When you build equity in your home you can eventually take that money out as a Home Equity line and use it as sort of a reverse mortgage that can pay you and help with your expenses.
How do you know when your home is your greatest liability?
What if when you bought your home it was in a desirable neighborhood, but then after time it is now considered a less-than-desirable one? This would reduce the equity of your home and could cause it to be considered a liability. Usually, a home is worth more as time passes, but on rare occasions due to location issues or a negative housing market cycle that can change. These things are out of your control, and occasionally can be fixed by time.
Another way that your home could be a liability is if you still are saddled with expenses without a working income. If you still have a mortgage, taxes, insurance, repair and renovation costs or an HOA fee you could be in over your head. These costs can add up and can leave you in a precarious place if something expensive breaks.
How do you make sure your home is working for you and not against you?
We know that homes have sentimental value, and this may weigh into your decision, but how do you make the decision if you should stay in your home or try and sell it? Take a minute and look at your life and think about how you want your retirement years to look. How important is where you live? What other things do you want to do with your time? How much can you afford? Where does your family live?
Taking the time to consider these important questions can help you determine if you should sell and downsize into something that costs less. You can often sell for more and buy for less and save the difference to fund your adventures. If you have time to plan ahead, you can make sure that you pay off your mortgage before your retirement date. Taking out a reverse mortgage or renting out your own can help you offset a cashflow deficit as well as just selling the home.
If you really want to stay in your home, you can look into ways to monetize your home equity by utilizing needs-based government programs for property tax abatement or forgivable grants. You can also investigate conventional mortgage loans or other lines of credit to help.
If you have any questions regarding your future as a homeowner or about retiring in Alaska, we are happy to help.
