Financing your new home in retirement

If you’re one of the many seniors who’s looking to build a new, smaller home, you may be wondering how you’re going to pay for it. Read on to find out about your options!

Sell your old home

You probably already know that a good chunk of your new home funds – if not all of them – can come from the sale of the larger home you’re moving from. But what you may not know is that you’ll be in a better position to buy your new home if you sell your old one first. Designing a new build when you don’t know the final purchase price of your former house can be financially risky.

Get a reverse mortgage

A reverse mortgage is a practical choice for those who don’t plan to use all the funds from the sale of their old house to buy their new one. Some of these mortgages state that you must be 62 or older, and may require your down payment to be fifty percent as opposed to the more common twenty percent.

Dig into your accounts

Other ways to fund the construction of your new home include home-equity lines of credit, or borrowing money from your 401(k) or IRA. However, bear in mind that these loans may have strict deadlines within which to pay them back.