Retirees Have Options in Today’s Market

Dear Sue,

My husband and I are in our seventies. We know that we will be in our eighties at the blink of an eye.

We love and have lived in the Auburn area our entire lives. We bought our second to the last home about ten years ago.

Yes, you heard me right. We bought a bigger home than we needed. Our plan was to let our home appreciate over five years or so and then sell it and buy a smaller less expensive home that we could retire in. We planned on taking advantage of the capital gains law where you can make a profit of up to $500,000.00 on your personal residence and not have to pay any taxes.

Obviously our plan has backfired. We keep waiting for the market to turn around but it just seems to get worse and we seem to get older. I forgot to mention that our home is on a slope and it is a two story. At our age I don’t think we have the time for the market to come back.

We are at a loss. We don’t know what to do or who to turn to for help!

Aging Angie

Dear Angie

Many aging homeowners are in a similar situation. Some of these seniors are upside down or “under water” in their present homes. If they have been current on their payments and have good credit and sufficient income they can complete a short sale and then actually buy another home immediately after they close their short sale escrow if they use FHA financing.

Since you purchased your home ten years ago and assuming that you didn’t refinance and take out all of your equity, you should be in a good equity position. If this is the case I would recommend that you sell your home and buy a smaller home that you find more suitable for retirement. You may sell your home for less money than you had planned on but keep in mind you will be buying for less money as well. This is referred to as a lateral move.

I have seen some amazing bargains in today’s market. One can buy a new 3 bedroom, 2 baths, 1900 sq ft. single level home in Auburn for just $275,000.00.00. That was unheard of just three years ago! You can get better deals if you are willing to move to Lincoln, Rocklin or Roseville.

Some seniors currently residing in the homes they have retired in have lost income from their savings or investments. These seniors now have the reverse mortgage option. That is a program where the lender pays the homeowner a lump sum or scheduled monthly payments. The homeowner can stay where they are until they die.

The place to start is with a trusted financial planner. Understand the ins and outs of reverse mortgages. Weigh all of your options, do the math. Choose the option that meets your needs and then make a plan.

If you think you want to sell your current home and buy a home that meets your retirement needs you will need information. Select a skilled and patient Realtor that can give you a fair market evaluation of your current home. Have her/him show you the homes that are available on the market that may work for your retirement. Make sure that it makes financial sense before you put your home on the market. Doing the homework will be a matter of good home $$’s and Sense!