Wednesday, September 26, 2012

Should I Downsize My Home?

downsizing your homeAs many seniors get older and the kids move out they are faced with a choice; should I continue living in the home I have lived in and raised my kids in for the past however many years, or move to something smaller?  The 55 and older communities can sound attractive with all the amenities and activities; plus it is nice to not cut your lawn or shovel any snow.  Some people look to a condo or townhouse to move to in their retirement years and others would just as soon buy that big RV bus and travel the country.  Whether you stay where you are or try a new place, there are pros and cons to everything.

The first thing you have to consider are the expenses.  The first expense that people encounter is the cost to sale and move.  Unless you are a great marketer and can sell the home yourself, you will need to hire a Realtor.  Most Realtors are good at what they do, but you have to pay them on average a 6% fee to market and sell your home.  On a $250,000 home this is $15,000 right off the top, not counting the costs to actually move which usually are more than you think.  A smaller home in a retirement community may be have cheaper utility bills every month, but you also have to consider the HOA fees that many of these communities have.  Depending on the amenities, these fees can easily be over $100 a month.

Next you have to consider how your family will feel.  Even though it is not your kids decision with where you will live, they certainly will have some iffy feelings if you sale and move the home they grew up in.  Some kids don't care, but some are very sentimental.  You may even be feeling that way, by leaving the place where you have made so many memories.

The last thing; What in the world are you going to do with all your stuff?  Over the years we can collect a lot of things.  Sure there are probably a lot of things that can be given to your kids, or just thrown away, but for the things you want to hang onto, will your smaller house have room for them?  There are actually 3rd party companies you can pay to help you decide what you should keep and what you should get rid of.  While this can be a great idea because they are not emotionally attached to your items, this is another expense you will have to consider.

Moving into a smaller house during retirement can be a great option.  Less space to have to clean and upkeep, possibly cheaper mortgage and utilities, and maybe some more opportunities for additional activities.  If this option is for you, then now is probably a great time to buy a new home.  Unfortunately it is a bad time to sell a home.  Many seniors are deciding just like the "stay-cation" has become popular instead of the "vacation" it is better to stay at home during retirement.  If you are feeling this way, the reverse mortgage may be a good option for you.  It allows you to stay in your home and not make a mortgage payment.  If you qualify, it may also give you some extra cash to help supplement your retirement.  If you are looking into downsizing your home to save money, before you do so, check into the reverse mortgage program; you may be surprised at how inexpensive it is along with all the other benefits you get by staying in your home!  To see if you qualify, try our reverse mortgage calculator.

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