Some retirees save a great deal of money by doing so; others do not.
You want to retire, and you own a large home that is nearly or fully paid off. The kids are gone, but the upkeep costs haven’t fallen. Should you retire and keep your home? Or sell your home and retire? Maybe it’s time to downsize.
Lower housing expenses could put more cash in your pocket. If your home isn’t paid off yet, have you considered how much money is going toward the home loan? When you took out your mortgage, your lender likely wanted your monthly payment to amount to no more than 28% of your total gross income, or no more than 36% of your total monthly debt repayments. Those are pretty standard metrics in the mortgage industry.
What percentage of your gross income are you devoting to your mortgage payments today? Even if your home loan is 15 or 20 years old, you still may be devoting a significant part of your gross income to it. When you move to a smaller home, your mortgage expenses may lessen (or disappear) and your cash flow may greatly increase. You could get in touch with companies like Crawford Home Buyers (https://webuyhousesinatlanta.com/) who usually buy for cash, and often in a short span. This means that you could sell your sprawling home quick, and begin to downsize.
You might even be able to buy a smaller home with cash (if finances permit) and cut your tax liability. Optionally, that smaller home could be in a state or region with lower income taxes and a lower cost of living.
You could capitalize on some home equity. Why not convert some home equity into retirement income? If you were forced into early retirement by some corporate downsizing, you might have a sudden and pressing need for retirement capital, another reason to sell that home you bought decades ago and head for a smaller one.
The lifestyle reasons to downsize (or not). Maybe your home is too much to keep up with, or maybe you don’t want to climb stairs anymore. Maybe a condo or an over-55 community appeals to you. Maybe you want to be where it seldom snows or want to live a peaceful life somewhere in Rhode Island (those interested can learn more here), for instance.
On the other hand, you may want and need the familiarity of your current home and your immediate neighborhood (not to mention the friends close by).
Sometimes retirees underestimate the cost of downsizing. Even the logistics can be expensive. Just packing up and moving a two-to-three-bedroom home will cost about $1,250 if you are resettling locally. If you are sending it long distance, you can expect the journey to cost around $5,000, if not more. If you can’t sell or move everything, the excess may go into storage, and the price tag on that may be around $90 a month. In selling your home, you will probably pay commissions to both your agent and the buyer’s agent that add up to 6% of the sale price. For this reason, you may want to sell your home at the highest price possible. Nowadays, a homebuyer usually pays attention towards the condition of the property. Thus, you may need to repair the cracks, paint the old wall, and replace the leaking roof (if interested, have a look at roofing in Denver), which might help you to list your home at a considerably high price. Take, into consideration the below-mentioned example to understand the above-motioned words better. Minor repairs done to the house can prove to be beneficial. For instance, getting the popcorn ceiling repaired (with the help of experts at firms like The Patch Boys – they are known to offer Naperville popcorn ceiling removal services) or the floor tiles thoroughly cleaned can instantly grab the attention of buyers who come to check out the house. When they find that your dwelling is in a good shape, they would be ecstatic to make the purchase quickly. This is because buyers would be pleased not to have to spend any money repairing those things in their new house.
Some people want to retire and then sell their home, but it may be wiser to sell a home and then retire if the real estate market slows. If you sell sooner instead of later, you can always rent until you find a smaller house that could save you thousands (or tens of thousands) of dollars over time.
Run the numbers as accurately as you think you can before you make a move. Downsizing always seems to have a hidden cost or two, but for many retirees, it can open a door to long-term savings. Other seniors may find it cheaper to age in place. We encourage you to reach out to your advisor ta Kendall Capital to evaluate all options and determine what is best for you.
