If you are considering downsizing your home, you may be ready. In addition to financial concerns, you must also consider several other things, such as where you want to move, why you want to downsize, whether you are downsizing in addition to a move that you feel you must make and whether you are physically able to take care of a larger home.
Reduce Financial Costs
You may not have financial issues, but you want some extra cash to travel or for other things. If you are considering downsizing house to save money, take into consideration the cost of selling a home and buying a new one or even moving into an apartment:
- Closing costs to sell your home are usually around 10 percent, including the real estate agent’s commission.
- A down payment on another house is going to take some of that cash you may want to use for other things.
- Add the closing costs for buying another house.
- Moving into an apartment has its own costs: You’ll most likely need to put down a security deposit plus pay rent for the first and last month. If you have pets, you may be subject to a pet deposit.
- New utility account deposits.
- Moving costs. Even if you move most of your stuff yourself, you will have gas for a rental truck or using your own truck to make all the trips back and forth.
- Capital gains tax, if you go over the limit.
The easiest way to figure if downsizing is worth it is to subtract all of these costs from the equity in the home.
If you have a traveling bug and you are asking yourself, “When is the right time to downsize?” now might be a good time. Many people plan to retire and travel the country or even go overseas. If you plan to buy an RV and travel the country, make sure the market is ripe to sell your house. A good real estate agent will be able to tell you if the market is ripe to sell. Since you probably don’t have to move, you could afford to wait until the market will give you as much as possible for your home. As of the third quarter of 2018, the market is hot for sellers.
Kids Have Moved Out
If you’re an empty nester and are feeling that your current home is just too empty, you should research the cost of selling a home. Chances are, you don’t have to move right now. Whether you wait until retirement or downsize now depends on how much you’ll be able to get out of your home and how the market is projected to look in the next 10 or so years.
Furthermore, if you are still too young to retire, you may want to use those extra rooms. If you decide to start a home business with your favorite hobby, you may want the extra space to work on that hobby or to use as an office. When you are considering, “Should I downsize my home?” it’s best to look at what you might be doing in the future – you may need or want that extra space.
If you are retired or ready to retire, you may want to downsize to something you are easily able to maintain or because you want to move closer to your children. If you are having a hard time maintaining the house, don’t hold onto it because of emotions. The house will just end up being worth less if you can’t care for it.
Downsizing Your Home
The best age to downsize is when you feel you’re ready, as long as the financial picture adds up. “Should I downsize before retirement?” Definitely, if you want a smaller house, if it benefits you financially or if you don’t think you are able to keep up with the maintenance. Your next question might be how to downsize your home. Know how much you owe on your current home, how much it will cost to sell your home, what type of mortgage rates you can get if you are going to be financing, and whether you can buy a house with cash.
And, make sure you’re not going to want more space! Start packing up “clutter” such as knick-knacks and items you don’t need, then contact On Point Carolinas Realty to discuss selling your home and purchasing a new home with one of our real estate agents.