Is it Time to Downsize your Home?

A recent study by Edelman Berland revealed that of homeowners who are contemplating selling their house in the near future 33% plan to scale down. Let’s look at a few reasons why that would make sense to many Americans.

In a recent blog post, Dave Ramsey, the financial guru, discussed the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

  1. A smaller home means less space, but it also means less time, stress and money spent on upkeep
  2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
  3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in a recent article. They suggest you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: WHAT KIND OF LIFESTYLE DO I WANT AFTER I DOWNSIZE?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profit from the sale of their current home and splitting it to put down payments on a smaller home in their current location and a vacation/retirement home where they plan to live when they retire.

This allows them to lock in the home price and mortgage interest rate at today’s values. This makes sense financially as both home prices and interest rates are projected to rise.

Q: HAVE I BUILT UP ENOUGH EQUITY IN MY CURRENT HOME TO MAKE A PROFIT?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A recent study by Fannie Mae revealed that only 37% of Americans believe they have significant equity (> 20%) in their current home. In actually, 69% have greater than 20% equity. That equity could enable you to build a life you have always dreamt about.

BOTTOM LINE

If you are debating downsizing your home and want to evaluate the options you currently have, let's get together to talk about the process.


e7d7f804 2385 4dc7 8b19 7c4e123a5504 62ad9b94 09df 48aa 8817 faf6ca69a7c7 9751dcda b83b 4048 aedc 081a54688d00 1c6d16d2 191d 4052 818e 139b9ad87349 dc8e56b1 aa76 48e3 bbcf 0fae18f2c81e f5820995 8c5c 4e61 84a0 960721b86fef 6c397256 47fa 4a33 8ad5 476fe5c89fb0 3e8f1237 751a 471c 8baa e06dff3267d7 6348cecc bf9d 4402 a6ae 054609206b6a 2be04a38 b8fe 460e 81e5 ed6b730c62a1 93a5dadc 1efc 45e2 8946 6077f69e8486 863a5ddc 3094 4c3a b15b 7ffcd429846f 79b3aa60 5110 4503 9e04 c14feaf4795d 3ec72db3 c93a 4e70 9d24 43b27eb5acb2 a03abb1b d290 4f22 8115 6f49863aa680 8bda0f87 1486 404b bccd 5cba420d83f9 f97574e8 08ad 4141 af7e ebedcb983cb1 35b73392 34a7 4892 b364 a8d88ecf28f1 5b941768 32b3 4950 9dfe fb33cc1efcc1 5ccb40b3 ede4 4abb b05d 5879b0c4a290 d679bb39 f418 4308 a952 ac95748a6097 5a8334a6 305a 488f b2d7 a55966e61d0d 6ddf5c35 1b08 4448 95c7 430a19503ee7