Dear David,
We’ve lived in our home for almost 20 years. The kids have moved out. We’re not sure if we should consider downsizing as we are still quite active. How do most people know when it’s time? – YOUNG AT HEART
DEAR YOUNG AT HEART: The decision to keep your family home or downsize is an intensely personal one. Your finances, health and lifestyle all come into play, which makes the timeline a bit different for everyone.
If you’re toying with the idea of right-sizing, start by taking stock of your budget. Retirement savings are finite and you’ll need them to last, especially if you are young and active now. I tend to ballpark the average retirement housing budget at about 30 percent of your guaranteed income stream, but suggest you meet with your financial advisor and run the numbers (if you haven’t sought expert financial advice before, now is a good time). If managing the financial burden of your current home is going to be a stretch, it may be time to think about a move.
Next, consider your workload. Do you have the stamina and desire to clean and maintain your current home? If not, can you afford to bring in professional help? Many homeowners decide to right-size when they weigh the work required to maintain their property against the freedom to travel and pursue their retirement dreams. After all, that freedom is what you’ve been working for all these years.
Lastly, take a realistic look at your physical needs. Does your existing home have a lot of vacant space that is no longer required, but costs money to heat and maintain? Are there stairs or other obstacles that may be difficult to navigate in the near future? Would a bungalow, condominium or apartment make more sense? Your answers will steer you in the right direction. Pro Tip: Right-sizing is about enhancing your lifestyle, not diminishing it. An honest look at your goals and priorities can help you decide whether to stay in your home or look for something new.
Dear David,
We’re selling our home and just found out there’s a $5000 mortgage penalty. This means we’ll need the buyers to pay $5000, more so we can get the house we want. How can we orchestrate this? – WATCHING THE BOTTOM LINE
DEAR WATCHING: When listing a home for sale, the homeowner sets the price at their discretion, but the value is determined by what a buyer is willing to pay. Real estate values are affected by fluctuating inventory levels, buyer demand and comparable local sales. Unfortunately, what you owe on your mortgage isn’t part of the equation.
From a buyer’s perspective, your house is worth what it’s worth. If the amount you owe on your current home is preventing you from affording the house you want, you may need to adjust your expectations. It’s not up to the buyer to bridge this gap.
Pro Tip: As a Realtor, I help sellers set reasonable goals with regards to price and help buyers make sure they don’t overpay. Whether buying or selling, my role is to ensure that a client’s best interests are protected through fair and honest practices.
