Four questions to consider if you’ve thought of downsizing.
Adapted from Realtor.com
When is the time to “right size” to a home that’s better suited to your needs? Well, if you’re in the 60+ crowd (or have a parent in that age group), there are plenty of things that can go into that decision. Maybe you’re finding yourself in a (more or less) empty nest. Or maybe you want to travel more and maintaining your big home and lot is a hassle while you’re gone. Or all the maintenance on your current home is more than you can or want to handle. And maybe—just maybe–you want to simplify your life.
Downsizing doesn’t mean you must compromise on the lifestyle you want. In fact, when you make an informed decision on how best to achieve it, you may find the freedom offered by living in and maintaining a smaller home offers huge rewards!
So if you’re thinking about downsizing, ask yourself these questions first:
Q: What kind of lifestyle do I want after I downsize?
For some, it’s a matter of living a simpler life focused on family. Or travel more—or live in a low-maintenance, age restricted community with high-end upgrades and social events. Decide what you want to achieve from your move and you’ll be able to narrow down your housing options.
Alex Haigh, a Realtor® with Illustrated Properties in Stuart, FL, says many people come to South Florida for the warmer weather and amenities, and he’s seeing more seniors who are still working—because they enjoy it or want to have an extra cushion in their budgets.
Debra Whitfield, a Realtor® in Charleston, SC, who specializes in working with seniors, sees her older clients making two types of moves.
“The first move are retirees looking to enjoy their freedom, so they come down to Charleston to find active adult communities where they meet like-minded people that they can befriend easily,” Whitfield says. “The second comes after retirees have enjoyed their freedom for 10 years or so and they decide to move one last time to live closer to family to have the physical, emotional, and spiritual support they need.”
Q: What should my buying budget look like?
If you’re planning to retire soon or have already entered those coveted golden years, you’ll likely be on a fixed income. Downsizing might net you a decent profit, especially if the home you’re buying next costs considerably less than the one you’re selling. Consider other expenses as you age: medical bills, health and life insurance, travel, estate planning, final expenses, and home maintenance. The common rule of thumb: Spend no more than 30% of your monthly income on housing. But in theory, it should be a lot less if you’re downsizing.
Q: Have I built up enough equity in my current home to make a profit?
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. Unless you have a significant amount of debt to pay off, chances are you’ll see enough profit from your sale to buy your next home outright or bring a sizable down payment on closing day.
Many downsizing buyers have an advantage in bidding wars since they walked away with a profit on the sale of their old home. They have the funds and solid credit history to pay all cash or provide a large down payment.
Q: Will I be able to find another home that’s affordable in a seller’s market?
Many agents advise their sellers who have the financial means to buy their next home first before selling their current one. It’s possible to either take out an equity line of credit on their current home or a home equity conversion mortgage to finance their purchase, then pay off the loan when they sell their former home.
In a tight housing market, sellers who buy their next home first gives them control over finding the perfect property instead of being rushed to find whatever happens to be on the market after their current house is under contract.
If you’ve considered downsizing or purchasing a new home that better suits your needs and lifestyle, contact Brandee Kelley to determine what your current home is worth and discuss what you are looking for in your new home.
For questions and concerns about financing options, contact Don Kelly with Affiliated Bank. Don is the Brandee Kelley Group’s preferred lender because he is knowledgeable, ethical and very experienced in guiding you into the very best loan option available.