When looking at retirement savings, saving as much money as possible is very attractive. A longstanding and popular way to do this is downsizing. When you think about cutting costs, you think about frequent purchases like groceries and other goods. However, downsizing your home often means reducing the bills that come with it, such as mortgage payments, utilities and maintenance requirements. Realtor.com Stock:
“A smaller home typically means lower bills and less upkeep. Then there’s the potential windfall that comes from selling your larger home and buying something smaller.”
This extraordinary profit depends on surplus value. If you’ve lived in your home for a while, you may have built up a significant amount of equity. And that equity can help you buy a home that meets your needs today. Daniel Hunt, CFA at Morgan Stanley, explains:
“Home equity can be a significant source of wealth for retirees, often representing a large portion of their net worth. . . . Retirement planning can be complex, but your home equity shouldn’t be overlooked.”
When you’re ready to take the next step with that capital, an agent will guide you through each step of the process. This includes determining the right price to sell your home, finding a home that fits your changing needs, and understanding how much you can afford at current mortgage interest rates.
What does this mean to you?
If you’re considering downsizing, ask yourself the following questions:
Will your original reasons for buying your current home remain the same, or have your needs changed since then?
Do you need space now or would a smaller space be better?
How much is your home currently costing and how much do you want to save by downsizing?
Then contact the real estate agent and answer the following questions: What are my options in the current market? A local real estate agent can show you how much equity you have in your home and how you could benefit from the discount.