If you're thinking about selling your home to free up cash, you can choose to buy something less expensive, or to rent. Make sure you understand your options.
3 main advantages
- Frees up cash – Invest the money, buy an annuity to create monthly income or use it to cover expenses.
- May reduce costs – There are generally fewer costs if you buy a smaller home or rent.
- May keep some equity – If you sell and buy a smaller home, you keep some equity in an asset that may go up in value. That means you can leave more to your family or estate.
If you sell, you may be giving up a home you love in an area you like whether you buy a cheaper home or rent. Here are some other things to consider:
- If you buy something less expensive – You still have to pay property tax and costs to maintain your home. Your home equity may be reduced, which means less equity when you sell or less left to your estate.
- If you rent – You'll pay a monthly rent payment. You may have to pay tax on any unsheltered investments you make using the money from your home. And you have no opportunity for future growth in the value of your home.
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