A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their house in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing aseller’s market.
In a recent blog, Dave Ramsey, the financial guru,highlightedthe 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:
A smaller home means less space, but it also means less time, stress and money spent on upkeep.
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.
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 that 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 in order to put down payments on a smaller home in their current location, as well as 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 study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality,CoreLogic’slatestEquity Report revealed that 72.6% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about.
If you are debating downsizing your home and want to evaluate the options you currently have, let's meet up so I can help guide you through the process.
Author:Jeffrey Lubell Phone: 703-999-8707 Dated: September 1st 2016 Views: 386 About Jeffrey: Jeff Lubell - Cell Phone 703-999-8707
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"“Jeff is an amazing realtor! He goes above and beyond. I was going through a divorce, so Jeff had to deal with me and my ex-husband. I was rather emotional and Jeff was extremely helpful, guiding me through the entire process and explaining each and every step in detail. We had some repairs that needed to be done and Jeff was able to assist me in finding the right contractors to do the job. He was relentless in his efforts, open houses, online tours, listings, broker open houses and more! We accepted an offer and discovered shortly thereafter we had a buyer from hell. This buyer was extremely demanding and the buyer's realtor couldn't control her own client. Jeff was able to deal with the buyer and his realtor, through his extraordinary efforts and expertise, so we were able to get through to settlement and close on the sale. If that wasn't enough, the purchase of my new condo wasn't going smooth either. With Jeff's tremendous experience, he was able to turn the roadblocks into an amazing deal for me! I hate to think about how many hours he spent on my sale and purchase...it was insane! I honestly don't think I could have gotten through the sale of my townhouse or purchase of my new condo if it wasn't for him. And I can't thank him enough. He's the only one I'm going to call when I'm ready to move again, and I'll be recommending him to everyone I know!! Thank you so much, Jeff! You are truly amazing! “
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