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Financial Benefits of Downsizing Your Home

The kids are married with their own families and you have a lot of extra space in your home. You also have a lot of mortgage left and might be tired of cleaning rooms you don’t use. It might be time to downsize your home. In addition to having a home that is easier to clean, you’ll realize many financial benefits of downsizing your home. And, if you are retired and on a fixed income, or you plan to retire in the next year or two, your pocket will thank you for making the decision to downsize.

1. Paying Off Your Mortgage

One of the biggest downsizing financial benefits is paying off a huge mortgage. Even if you have a new mortgage for the smaller house, that mortgage will be smaller. You may also get a better interest rate than the rate you had on the old mortgage. If you have enough equity in the house you are selling, you could have a house without a mortgage payment.

2. Clear Up Debt

You could downsize house to get out of debt, too. One of the financial benefits of downsizing is being able to pay off some or all of your debt. In addition to paying off your mortgage, you may also be able to pay off credit card debt, outstanding medical bills and other liabilities such as your vehicles. Clearing debt releases a large burden on you and frees up money so that you are able to enjoy yourself instead of working longer than you need to.

3. Reducing Monthly Expenses

Are you still asking yourself, “Should I downsize my home?” Are you still wondering, “When is the right time to downsize your home?” In addition to getting rid of a big mortgage and clearing up some debt, you will be able to reduce your monthly expenses, too. A smaller home takes less energy to heat and cool, plus you’ll most likely use less light, you may have a smaller yard to water and maintain, and you’ll spend less maintaining a smaller home.

4. Other Benefits to Downsizing

Downsizing home to save money for retirement brings about many factors to think about. If it looks feasible to downsize on the financial side of the picture, you still have to look at the rest of the picture. Do you plan on starting a small business after retirement? You may need that extra space. If you plan on having relatives stay over often, you may need that extra bedroom. If these types of benefits fall in line along with the financial benefits, you have answered your own question of “Should I downsize my house and pay off debt.”

5. When You’re Ready to Sell

Doing your research about selling your house is just as important as doing the research on buying a house. You’ll want a good realtor to showcase your home. You need to know what the closing costs are for selling your home. In most cases, closing costs, including the realtor’s fee, costs about 10 percent of the value of the home.

Always have all of the documents you need for closing ready for the closing. As a seller, you don’t have as many document requirements as a buyer, but you should still be prepared. If you are doing a double closing – that is, closing on the house you are selling, then immediately closing on the house you are buying, have everything ready for both closings.

Understand seller’s concessions. These could make or break a deal. For example, a buyer may want you to pay his closing costs. If you refuse, you could lose the sale. Other concessions include repairs that may need to be made. You could make the repairs yourself or you could decrease the cost of the house by the amount of each repair estimate.

For more information about downsizing your home for retirement, contact On Point Carolina Realty to speak with one of our agents.

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About The Author
Kim McBee

Kim McBee epitomizes integrity, energy, hard work and a creative service in every detail of your real estate transaction that makes buying or selling your home an incredible, memorable experience. She uses her 13 years of experience to help you achieve your goals with the least amount of stress possible. Whether a first time buyer or an experienced seller, Kim will bring her spirited energy and real estate knowledge to your next adventure. Kim is a licensed Real Estate Broker in both North and South Carolina and is an active member of the Charlotte Regional Realtors Association as well as the National and Local Home Builders Associations. Kim started her career in real estate in 2002 with Crescent Resources, a large residential, commercial and multi-family developer based in Charlotte, NC. She and partner Gus Testa had the opportunity to work in most of their residential communities in the Charlotte region during their ten (10) year tenure. In 2012, Kim and Gus, along with a local area developer, formed On Point Carolinas Realty, LLC. On Point Carolinas Realty, LLC is a full service real estate company, working with buyers and sellers in both new home construction and re-sale homes. From 2002 – 2012, Kim and Gus sold between $15 - $50 million in volume in the Lake Norman, Charlotte and northern most portions of South Carolina. Now with On Point Carolinas Realty, LLC, they continue to work every aspect of the real estate industry representing sellers, buyers, investors and banks in the residential market. Before entering the real estate industry, Kim took a five year leave of absence from work as a scheduling analyst/cost engineer in the nuclear power industry for Stone & Webster >Engineering and Bechtel Power Corporation to stay home and raise her son.

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