One method for freeing home equity for other uses is to downsize your home as a part of moving. Downsizing could mean either moving to a smaller home, or moving into a similar-sized home in a less expensive community.
The arithmetic is fairly basic. If you’ve paid off your mortgage and live in a $300,000 home, and then sell it and move into a $200,000 home, then $100,000 of your home equity has been freed for other uses.
Another possibility is simply to sell your home and then move to a senior living community. Renting frees up home equity and provides more optionality and flexibility to make more frequent moves before settling down.
When analyzing the decision to rent or buy, you’ll need to consider factors such as the loss of build-up in home equity and its subsequent growth (or loss) and savings on property taxes and other types of home maintenance.
As a part of downsizing, you could consider moving to an assisted living community which may be less expensive because of the amenities offered and provide organized activities and social support.
For more information, contact Spring Arbor.
Excerpts - Forbes