Avoid real estate pitfalls when nearing retirement As a managing partner with Lexington Avenue Capital Management, a financial advisory firm, Larry Luxenberg regularly sees people in retirement or heading for retirement make a slew of mistakes when it comes to real estate."Real estate is usually one of the biggest assets retirees have, but it's the area with the most emotional attachment - and a place where it's very easy to mess up," Luxenberg told MarketWatch .The majority of Americans gearing up for retirement understand they will have to make some real estate decisions at the end of their working tenure. Should they downsize or relocate to a new community? Or maybe they're thinking about tackling a home improvement project that will make their current residence better to live in as they get older. Here are a few real estate mistakes retirees should try to avoid:Not investing the money they receive from downsizing With their children already out on their own, many retiring couples decide to downsize their property, meaning they sell their current home for a smaller property. After all, a retiring couple isn't likely to need all the space they were using while raising a family.But Luxenberg said it's important for those that downsize to remember that not everyone will come out ahead when it comes to cash at closing. Some people will move into a smaller place, but after taxes and closing costs, won't net much profit.But for those that do see some additional cash at closing, he urges retirees to invest some of that cash."People have a tendency to look at that as found money," said Luxenberg, noting that it's very easy for them to spend it quickly.Wade Pfau, a professor of retirement income in the Financial and Retirement Planning Ph.D. program at The American College, told The Wall Street Journal couples with equity in their homes might want to consider a downsize because it turns some of their wealth into liquid financial assets they can use for other retirement expenses .Pfau said choosing to downsize also prompts couples to sift through their belongings, spurring them to get rid of items that are no longer needed or in use.Meanwhile, Scott Bishop, director of financial planning with STA Wealth Advisors, told MarketWatch couples who come out ahead from a downsize might want to use those funds first, because it would allow them to leave retirement funds untouched for a greater period of time.Think about mortgage loans Thomas Scanlon, an adviser with Raymond James in Manchester, Connecticut, told MarketWatch not everyone should take out a mortgage loan during retirement."If someone is 50 years old, he'd have the mortgage until he's 80," he said.However, interest rates are still favorable and owners can deduct mortgage interest when filing their income taxes.The Consumer Financial Protection Bureau asks homeowners nearing retirement to aim for a specific period of time when they can pay off their mortgage. The agency added that those who downsize or are in the process of looking for another home should consider a 10- to 15-year loan instead of a term of 30 years.While a homeowner nearing retirement will have higher monthly payments with a short-term mortgage, they will be less likely to carry the burden of monthly payments into their elder years.Keep your financial records intact Lori Trawinski, director of banking and finance with AARP's Public Policy Institute, told the Los Angeles Times those considering retirement - or currently retired - need to keep well-ordered details of their expenses and expected retirement income . "Everything depends on someone's personal financial situation," Trawinski said. "Having a mortgage or tapping into home equity is not, in and of itself, a bad thing.". 5 real estate mistakes retirees make, MarketWatch. What Should Couples Do When Downsizing in Retirement?, Wall Street Journal. How seniors can lessen the mortgage burden, LA Times The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its affiliates and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.