What If Your Home Could Help Fund the Life You Want to Live?

Written by Jeanette Nelson

For many longtime homeowners, a home is much more than a place to live. It's where you raised a family, celebrated holidays, built memories, and created a life.

Yet after years, sometimes decades, of homeownership, it may also have become one of your largest financial assets.

That raises an interesting question:

Could the value you've built in your home help you enjoy the next chapter of your life?

That doesn't necessarily mean selling your home. It means understanding what you have, what you want, and what options may be available to you.

It's easy to begin with the question, "Should I stay or should I move?"

Try starting somewhere else.

Ask yourself:

What would I like the next 5, 10, or 15 years of my life to look like?

Maybe you'd like to travel more. Perhaps you'd like fewer household responsibilities, more financial breathing room, or a home that's easier to maintain. You may want to live closer to children and grandchildren, or simply have more freedom to enjoy retirement.

Once you know what you want your life to look like, you can begin asking whether your current home supports those goals.

If you've owned your home for many years, you may have accumulated substantial equity.

That equity doesn't automatically mean you should do anything with it. Yet understanding it can help you see possibilities you may not have considered.

Depending on your circumstances, your housing decisions might help you:

• Reduce monthly expenses
• Move into a home that's easier to maintain
• Purchase a single-story home
• Relocate closer to family
• Make improvements that allow you to remain in your current home longer
• Create additional financial flexibility for retirement
• Set aside resources for future needs
• Enjoy more travel, hobbies, or experiences

Sometimes simply knowing what's possible can provide peace of mind.

That's an option, too.

For some homeowners, the best use of their resources may be making their existing home work better for the years ahead.

That could mean creating a first-floor bedroom, improving bathroom accessibility, reducing maintenance, updating lighting, or making other changes that allow you to live more comfortably and safely.

The goal isn't necessarily to move.

The goal is to make sure your home continues to support the life you want.

Maybe the children moved out years ago, several rooms rarely get used, and you're spending more time maintaining the house than enjoying it.

In that situation, it can be worthwhile to explore what a different housing arrangement might look like.

For some homeowners, moving to a smaller or lower-maintenance property can reduce responsibilities and potentially free up some of the wealth tied to the current home.

Yet downsizing isn't automatically less expensive. The price of the replacement home, property taxes, HOA fees, insurance, moving expenses, and other costs all need to be considered.

That's why it's important to look at the whole picture, not just the selling price of your current home.

Before making decisions involving a significant amount of home equity, it's wise to consider how those choices fit with your overall financial plan.

Questions worth discussing with the appropriate financial, tax, or estate-planning professionals may include:

• How much money will I need for the years ahead?
• What will my future housing costs look like?
• Could a decision affect my taxes or estate plan?
• How much should I keep available for unexpected expenses or future care?
• If I'd like to help my children or grandchildren, how do I do that without compromising my own financial security?

These aren't questions you need to answer overnight.

They're questions worth asking while you have the time and freedom to explore them carefully.

One of the greatest advantages you can give yourself is time.

You don't need to wait until maintaining the home becomes difficult, stairs become a problem, or an unexpected life event forces you to make a quick decision.

You can learn about your options now, even if you don't plan to make a change for years.

Planning doesn't mean you're moving.

Planning means you're prepared.

Many Huntington Beach and Orange County homeowners bought their homes decades ago, so the difference between what they paid and what the home is worth today can be significant.

Two rules are worth understanding before you make any decision:

• California Proposition 19. If you are 55 or older, you may be able to transfer your current property tax base to a replacement home anywhere in California, up to three times. For many longtime owners, this is what makes a move possible without a big jump in property taxes.
• The home sale tax exclusion. When you sell a primary residence you have owned and lived in for at least two of the last five years, up to $250,000 of gain ($500,000 for a married couple) may be excluded from federal income tax.

Get my free Prop 19 guide
A plain-language guide for California homeowners

Both come with rules and exceptions, so talk with your tax professional about how they apply to you. I'm happy to walk you through what downsizing in Orange County can look like and connect you with professionals I trust. Start with my free Complete Downsizing Checklist.

A simple place to begin is understanding approximately what your home is worth right now. You can get an instant estimate or a detailed home value report on my website.

You may be surprised by how much your home's value has changed since you purchased it.

Knowing its current market value can help you have more meaningful conversations with your financial advisor, family, or other professionals and better understand which possibilities may or may not make sense for you.

It's:

"What do I want my life to look like, and is my home helping me get there?"

For one person, the answer may be staying exactly where they are.

For another, it might mean modifying the home.

And for someone else, it could mean simplifying, moving closer to family, or using the value they've built over many years to create greater flexibility.

There isn't one right answer.

There is only the answer that's right for you.

If you'd like to understand your home's current value or explore different housing possibilities, I'm happy to help you gather the information you need.

There's no expectation that you're ready to sell. Sometimes understanding your options is simply the first step toward creating a plan for the future.

Jeanette Nelson, REALTOR®

Senior Real Estate Specialist (SRES®)

Certified Real Estate Planner

DRE: 01397168

714.366.8575