As generations change, their housing needs vary. Many baby boomers are finding that their larger homes are difficult to sell to younger generations with different interests. Generation X and millennials are simply not interested in sprawling homes with multiple bedrooms and big yards.
What can you do if your pre-retirement home isn't selling as well as you'd hoped? Here are four options you have.
A reverse mortgage is a great option for many seniors, but it's particularly valuable for those who can't get a good value for their home. In a reverse mortgage, as its name suggests, the mortgage company pays you each month instead of the other way around. The company takes ownership of the home and pay a monthly fee to you for living in it. Then, when you pass away, they can sell the home to recoup their investment. A reverse mortgage is the simplest way to get the value of your home upfront when you need it.
Renting out the House
If you don't want to live in a large home anymore but can't sell it, why not rent it? Becoming a landlord has some challenges — namely overseeing repairs and collecting rent as well as vetting potential renters — but it is also a source of monthly income that may exceed what you owe on the home. If you own a home outright, you may just owe taxes and insurance on it. In this case, monthly rent could provide enough income to pay for a smaller home for you and your spouse.
Sharing the Home
If your home was originally designed to house a family, it might still do exactly that. Many baby boomers have friends or family who could benefit from either a live-in companion or the ability to share expenses. Sharing a home reduces your overall costs and prevents loneliness. This is a great option for adult children who may have a hard time making it on their own or for adult siblings whose families have moved out.
Become a Vacation Rental
If your family isn't interested in sharing your home, why not consider renting it short-term? Unlike long-term renters, short-term vacation rentals come with little commitment. You can rent out a room, a portion of the house, or the whole house for as few nights or as many as you'd like. This is the most flexible way to take advantage of a larger home, as it can be adjusted to fit your own needs and schedule.
Which of these strategies can help you cover the costs of a home that you're unable to sell? Whether it's a complete payment — such as a reverse mortgage — or just a supplemental income to cover expenses, you'll surely create a more stable retirement plan and a happier time for years to come.