That’s good news for sellers who can command a higher price for their homes. At closing, they may find themselves with extra money in their pocket. But finance experts say not to be too hasty in spending that cash.
Like any windfall, there is no one right way to spend the proceeds of a house sale. “It boils down to your priorities for the intended money,” says Keith Bernhardt, vice president of retirement and college products for Fidelity. To maximize it, you need to consider a couple of factors, including the taxes you might have to pay….A bank account can be a poor place to keep money that isn’t going to be needed for a while. “It will lose value over time,” says Bernhardt. The minimal interest offered by savings accounts lags far behind the rate of inflation.
Even if you have enough from a home sale to purchase a new house with cash, Steven Azoury, [a chartered financial counselor from Michigan,] suggests only paying what’s needed for the down payment. The interest rates for mortgages are still low enough that it might make more sense to finance a house sale and invest the rest. You can read this entire article by clicking here.
Our take – Downsizing your home and using the profits to supplement your retirement income is a popular strategy among retirees. However, it is crucial that you plan it out accordingly and make the right investment with your profits. Don’t go it alone – we can help! Contact us at [email protected] to connect with one of our financial advisors.