Many people who have owned their home for a very long time wonder if there’s a benefit to selling their home and renting when retiring.
There are good arguments to be made for both, but there are two major factors that make many people think it’s a good idea to start renting in Mesa rather than continuing to own their home.
While there’s certainly an emotional part of the decision that absolutely should be considered, and potential tax implications, the two factors that tend to have the most weight in this decision are that the value is trapped in an asset and maintenance.
You’ve owned your home for many years, and it’s probably worth a great deal more than what you paid for it. You have a reasonable amount of money in savings, but if you need to access the money that’s trapped in the home, you’ve got a problem.
The housing market is unpredictable. While you’re likely to get the money you need from an eventual sale of the home if it comes to that, the money is trapped until you find a willing buyer. Then you have to wait another two or three months beyond that to account for closing delays and all of the other things that can trip up a sale.
There is a product out there that will let you access that value while staying in the home called a reverse mortgage, but there are two concerns. First, you’ll often get less than you should out of it. That’s just a function of the fact that they’re lending you money by speculating on the future value of your home and your life expectancy.
Any time someone loans money on a future asset, there’s a large hit taken. If you owned a business and wanted to factor receivables, the same thing would happen. In addition, an eventual sale is likely to be forced for the first “good enough” offer, rather than selling for everything the home could bring. This means problems for anyone who would inherit what’s left of the value.
In addition, continuing to own your home when retiring means that you’re responsible for substantial upkeep costs. Maintenance is a big one, but taxes are as well. Just the expense of continuing to live in a paid off home can often equal or exceed the cost of renting once you retire. Homeowners insurance is expensive, as well. All of these costs add up quickly.
Many people feel that they’re better off renting in retirement, because they avoid the risk of having value trapped in an asset that’s comparatively difficult to sell, along with the pitfalls of reverse mortgages. They also are concerned about the expenses of staying in their home long term. But how do you protect your personal property and guard against liability risks once you don’t need a homeowners policy?
That’s where a Mesa, AZ Renters Insurance comes into play. It provides most of the same coverage that your homeowners policy does, except that it doesn’t insure the building because you don’t own it. You still get coverage for your things, as well as for liability and additional living expenses after a loss. As a bonus, renters insurance in Arizona is drastically less expensive than homeowners insurance. A renters policy often is as little as fifteen dollars a month.
It takes just sixty seconds to quote and buy renters insurance online. If you’d rather speak with a renters insurance expert on the phone, that’s easy, too! Just call (800)892-4308 or click to get covered - whether you need Arizona renters insurance quotes online or coverage anywhere else!
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Photo Credit: Phillip Taylor Retire CC BY 2.0