Is Downsizing a Good Idea in the Current Market?

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Is Downsizing a Good Idea in the Current Market?

Approximately 33% of current homeowners are planning on downsizing on their next home purchase, according to a study by Edelman Berland. We’re going to dive into some of the reasons this is a reasonable approach for homeowners as the country continues to experience a seller’s market.

Financial guru Dave Ramsey recently discussed the advantages of selling your current home, in order to downsize to a property that better meets your current needs. Here are three possible advantages to downsizing, as explains by Ramsey:

  1. While a smaller home wiIs Downsizing a Good Idea in the Current Market?ll have less of a floor plan, this can also mean spending less time and money on cleaning and upkeep.
  2. A smaller property may allow homeowners to collect the extra money they’re saving on their smaller mortgage payment. Setting aside the extra $500/ month you now pocket could accumulate $1-1.6 million in 30 years’ time for retirement.
  3. Homeowners who downsize may have the opportunity to pay their entire mortgage on a smaller home in cash and enjoy a mortgage-free home going forward. There is also the option to work with a 15 year fixed-rate mortgage and to put down anywhere from 10-20%. Homeowners can also utilize the extra cash flow from a smaller mortgage and pay it off in less years, subsequently saving a lot of extra money in the process.

 

An article by Realtor.com emphasized that home buyers should ask themselves some important questions before deciding if downsizing is the right options for them. The following are two helpful questions and extra information to help:

Question: What lifestyle do I envision for myself after I downsize?
Answer: There are a number of reasons why downsizing is a great option for homebuyers. Some homeowners want to focus more on family and less on extras, while others are interested in more traveling or low-maintenance homes. Decide what kinds of lifestyle you want to live in this new home, and this will help you to decide what kind of property you’re looking for.

Comments: Many homeowners want to split the profit they make from their home and use it to pay for both their new mortgage, as well as a second property for vacation/retirement.

Because home prices and interest rates are set to rise, locking in at the present rates is a great idea.

Is Downsizing a Good Idea in the Current Market?Question: Was I able to build a large enough equity from my current home to have a profit?
Answer: The answer is a resounding yes for most homeowners, assuming they have possessed the property long enough to have a positive equity that they can use for a large down payment on their new home.

Comments: Fannie Mae revealed an informative study that showed that 37% of American homeowners thought they had a significant equity that was greater than 20%. In reality, 72.6% of homeowners had equity greater than 20%, revealing that many more people could build their dream life without even knowing it.

Bottom Line

If you’ve been thinking about downsizing but you’d like to talk with an expert, feel free to give us a call at 704.997.3794 to speak with one of our qualified agents! If you are thinking about selling your home in the Mountain Island area, please send us a message here and we’d be happy to assist you.

Looking for some extra reading on selling your home? Don’t miss our helpful blog on with How to Amp the Resale Value of Your Home!

If you decide you don’t like your home we will sell it for free. *some conditions apply*

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