If you’re like a lot of people, you might be thinking of downsizing into a smaller home in retirement. There are a number of great reasons for doing so, such as enjoying the lower maintenance of a smaller home and yard. And of course, you might wish to tap into the equity of your old home in order to help fund retirement.
In the most likely scenario, you will also downsize your living expenses by taking on a much smaller payment (unless you can afford to pay cash outright). Since most of us anticipate living on a fixed income in retirement, it’s no wonder so many want to lower their biggest monthly expense.
But if downsizing is a part of your retirement plan, there are at least two good reasons to do it now.
First, if you plan to take on a new mortgage, it is probably better to make the move now. Lenders prefer applicants who can demonstrate a strong income, and you’re probably earning more now than you will draw in retirement benefits later. You don’t want to retire, only to find that you can’t quite qualify for the mortgage you need.
Plus, making the move now can help you ease the transition into retirement. You can enjoy lower expenses during the last part of your career, and use the extra room in your budget to pay down other debts. You could even “practice” living on your new budget for a few months, to get a feel for your own retirement readiness.
In addition to those two primary reasons, selling your house right now might be a good idea due to inflated market values. But because values are so dependent upon the status of your local market, we definitely recommend that you seek advice from a real estate professional regarding your specific situation. .
As with any other big decision, give us a call to schedule an appointment. We can help you decide if downsizing now might be a wise move with regard to the rest of your overall retirement plan.