Home Equity: A Potential Lifeline for Retirement, says Financial Planner


Many American seniors find it challenging to maintain their quality of life after retirement. However, their most valuable financial asset might be right under their roofs. According to Julie Virta, a Certified Financial Planner (CFP), the family home could be a significant source of potential retirement income. This view was shared in a new commentary published by Kiplinger.

Housing Wealth: A Goldmine for Seniors

“About 80% of Americans over 60 are homeowners, and housing wealth accounts for nearly half of their median net worth,” Virta wrote, citing recent Vanguard research1. This indicates that homeowners nearing retirement could potentially tap into a significant retirement income.

The aging-in-place approach is gaining popularity among seniors. Nonetheless, Virta suggests downsizing could be a “significant source of funding for retirement.” She stressed that capitalizing on housing wealth requires a deep understanding of real estate trends, a strategic tax strategy, and a solid retirement plan, aspects a financial advisor could assist with.

Choosing a Retirement Destination Wisely

When selecting a retirement destination, several factors should be considered. Moving from a valuable housing market to a less valuable one can make a notable difference in tappable equity.

“Among people who retire and relocate, about 60% move to a less expensive housing market, allowing them to unlock about $100,000 of home equity from their previous home,” Virta noted.

She also emphasized the importance of considering where to invest extra cash obtained through the relocation strategy. Home sellers should be prepared to pay capital gains taxes on this gain and have enough money for tax filing, moving expenses, and closing costs.

Overlooking the Potential of H4P

The commentary didn’t mention the Home Equity Conversion Mortgage (HECM) for Purchase (H4P) program, an opportunity for reverse mortgage professionals to join the downsizing or relocation discussion. H4P allows a homeowner to finance the purchase of a new home with a reverse mortgage.

However, while H4P may provide some industry professionals with steady business, it remains a challenging sell. Last year, data from the U.S. Department of Housing and Urban Development (HUD)2 showed that H4P utilization fell in 2022. Despite this, it remains a viable option for clients who relocate or downsize their existing homes.

  1. Sadowski, J. (2023). Your most valuable retirement asset could be your home. Kiplinger. Retrieved from https://www.kiplinger.com/retirement/your-most-valuable-retirement-asset-could-be-your-home

U.S. Department of Housing and Urban Development. (2023). HUD’s Public Data Sets. Retrieved from https://data.hud.gov/data_sets.html

Unlock Your Treasure Chest: Leveraging Home Equity in Today’s Market

Has your home become your treasure chest? Are you looking at that equity and picturing vacations, investment opportunities, or freedom from high-interest credit card debt? Well, dear investor, your ship has come in! California Platinum Loans is here to navigate these promising waters of home equity with you.

Investing with Confidence

Ah, the thrill of the game! Investing can be as exhilarating as surfing at Huntington Beach, but you need confidence. Using your home equity to fund an investment makes sense when your returns outpace the loan cost. If you’re sporting a grin 50% wider than a surfer’s, chances are you’ve found such an opportunity. So, harness your home’s value and ride that investment wave!

Wiping Out Debt in the New Normal

Picture your home equity as a superhero swooping in to rescue you from the villainous clutches of high-interest debt. With low-interest forecasts, using a HEL or Home Equity Loan or HELOC Home Equity Line of Credit to settle a credit card or student loan debt is smarter than a Silicon Valley algorithm.

Investing in Experiences over Things

More people today treasure sunsets over Santorini than a new set of silverware. If you’ve been dreaming of such experiences, using a low-interest home equity loan can make these dreams a reality without the high-interest credit card hangover.

Weighing Your Options

Remember, home equity loans are secured by the equity in your home, making them a not-so-light decision. Just like you wouldn’t dive into uncharted waters, you shouldn’t dive into these loans unprepared. 

By collaborating with a competent professional in home mortgage and home equity loans, you can map out the most suitable path for your financial trajectory.

When it comes to leveraging home equity, the time is ripe, and the opportunities are as vast as the California skies. At California Platinum Loans, we’re ready to help you explore these opportunities and set sail toward a brighter financial future.

Ready to leverage the equity in your home? Contact us today, and let’s transform your equity into opportunity!