Should you downsize your home?
Assess your needs
The kids will soon be off to college and out of your home.
Should you run out and sell your house? It's not a simple
decision.
Factors that may encourage you
to stay include:
- do you want a place for your children and grandchildren to
stay when they visit?
- are you emotionally ready to leave?
Factors that may encourage you
to downsize include:
- do you need a smaller home because of financial reasons or
other circumstances?
- would you be better off if you saved money on your
mortgage payments, or do you need the profits from selling
your house to live on?
- do you need to move to be close to a spouse who is in a
nursing home?
- can you and your spouse still climb the stairs every day
to an upstairs bedroom?
Make sure it's affordable
If you decide to downsize, make sure the place fits both your
pocketbook and your lifestyle.
Ask a REALTOR?/sup> how much he or she will charge to
sell your house. Then determine how much you will end up with
from the sale. Under current tax rules, up to $500,000 (if you
are married and file jointly) in profits from the sale of your
principal residence are not taxable as long as you've lived
there for at least two of the previous five years. Up to
$250,000 in profits are not taxable if you're single. Consult a
tax advisor to discuss your situation.
Look into how much it would cost to move and to maintain a
smaller home. Make sure it really is cheaper to live there.
Decide to downsize only once you're satisfied that the finances
make sense.
Buy into your new lifestyle
A smaller house in your current neighborhood could be the right
decision if your priority is maintaining close ties to
neighbors. Just make sure there are amenities like public
transportation and stores nearby if your health begins to
deteriorate.
A
condominium or a unit in a retirement community could be
perfect if you never want to mow again, or if you want to focus
on travel, hobbies and perfecting your golf stroke in the
company of other seniors. Just remember you'll have to pay
maintenance fees for the upkeep of the common areas. Talk to
current residents to see whether they're happy with the way
things are run. Also investigate the rules. If the association
forbids pets and you're a devoted dog-owner, be prepared to move
on.
You may prefer to purchase a duplex or something similar.
Renting one of the units will bring in extra income, and you'll
have built-in neighbors.
If you're adventurous, you may even opt to move to another state
or country. Make sure to visit first, get your paperwork in
order and anticipate seeing less of the people you leave behind.
Finally, be prepared to sell or give away furniture and other
possessions. You'll have less space for everything after
downsizing.
Use our free mortgage payment calculators:
1.How much do I have to earn?
Not sure how much money you'll have to earn to afford your house payment and accompanying expenses?
2.Mortgage payment calculator
Want to know how much your monthly payment is for your mortgage?
3.Bi-weekly mortgage calculator
Want to know how much time and money you'll save paying off your loan on a bi-weekly payment plan?
4.Additional payment calculator
How much do you save by paying more or making additional payments than your initial mortgage terms?
5.How much can I borrow?
Want to know how big of a mortgage you can take on?
6.Should I pay discount points?
Not sure if you should pay discount points on your mortgage loan?
7.How much will I save by refinancing my loan?
How long will it take to recoup the costs of refinancing my home mortgage?
8.How much will my tax deduction be?
Want to know how much your home mortgage will save you in taxes?
9.APR calculator
To find out the annual percentage rate of your loan, enter the loan amount, interest rate, points, other costs and year-length term.
10.Interest only monthly payment calculator
To find out the monthly savings you could gain from an interest-only payment plan.
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