Can You Really Rent Your Way to Retirement?

Can You Really Rent Your Way to Retirement?

Think you’ve heard of everything? Well, think again.  Experts are now telling us that we can actually rent our way to retirement with something called rental mortgages.  So what does that mean, exactly?  Should we all sell our homes and move into rentals?

The idea behind renting your way to retirement is a novel point of view.  Remember the days where moving into a rental home was just a stepping-stone for the old-fashioned American Dream of homeownership?  What if you viewed renting as an investment instead?

Maybe this idea has been around forever and we just didn’t really know it.  Or perhaps it comes from the recent housing bubble bust-up we saw a couple of years ago.  Why sink money into an investment that can really hurt you in the long run?

Believe it or not, there is something called Lifetime Renters.  This is a group of people that is actually paving the way for a new approach to moving into a home for the rest of us.  Lifetime Renters usually consist of people in their 20s or 30s that have settled into long-term rentals.  And no, they aren’t planning on moving on anytime soon.

So, how do Lifetime Renters actually confirm that they are saving enough money to help them survive through retirement?  Usually, a structured mortgage can help determine this.  The radical new idea is actually known as a ‘rental mortgage’.

A rental mortgage isn’t what you might think.  Basically, the principle behind it is to set aside the amount of money you might otherwise be spending on a mortgage.  So, if you are paying $700 in rent each month but think you might have normally paid $800 on your mortgage, you’d put $100 into a retirement fund.  What you get at the end isn’t a house, but 100% principal that you get to keep plus the interest you earn over the years.

However, there is one important rule when dealing with a rental mortgage.  You are not allowed to touch the money until the age of retirement, which is usually about 65.  Treat it as you would an IRA or other investment with a maturity date and you won’t find yourself moving into a low-income retirement home!

Are you wondering how you might go about setting up a rental mortgage now?  It’s not really difficult at all.  All you really need to do is use an online mortgage calculator to figure out what your mortgage payment would be.  Be sure to put the number of years you have until retirement into the mortgage term field.

A rental mortgage can be an effective way to save money for retirement.  So, if you don’t want to move into a house you own, feel free to rent and try this unique way of saving.

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