It’s almost become a ritual of getting older: trading a larger home for one that’s smaller, easier to maintain, and safer for you and your spouse. Many people call it downsizing, and that’s appropriate, but it’s not like you’re really moving down. In fact, you’re moving up to a house that’s a better fit for your lifestyle, which can help you make the most of your retirement.
Navigating this process, however, can take some time and effort. You need to make sure you find a home that will fit your golden years, and a mortgage that fits into your retirement budget. So how can you make this process work better for you and your life? By keeping these handy tips in mind.
Selling Your Home Can Offer Major Money Perks
While the real estate market hasn’t completely rebounded from the big housing bubble, home prices are rising in many markets. That means your home’s value could be higher than you might think. This means selling your home could not only pay for a new one but could also help pad your retirement fund.
If you plan on downsizing to a smaller home, you could end up buying one that’s much cheaper than your current home. Although some bank and realtor fees may be involved, you could still earn enough of a return to make a sizeable downpayment. This can help reduce your monthly housing payment and stretch those retirement dollars further. Or you may even be able to buy a smaller home outright.
Determining Your Home Value Can Be Tricky
So, how do you know what your home is worth? There are several ways to determine that number, but the real estate market can change that number without warning. Meaning the money you poured into that new kitchen doesn’t automatically increase the home’s value (although a new kitchen can help) by a set dollar amount. It’s all about what the market will bear, and what people are willing to pay.
Working With a Real Estate Agent Can Help With Your Move
There are real estate agents specifically trained and experienced in helping seniors sell their house and buy a new one. These specialized agents may also help you navigate costs you haven’t considered yet, such as the cost of moving supplies, hotel fees when you’re between homes and the costs of traveling to your new home. To be on the safe side, be sure to check out a moving expense calculator so you can see quotes for all your moving options. In addition, scout out moving companies in your area to help you budget; note that some Park City moving companies start as low as $69 per hour for two movers.
Reverse Mortgages Can Help With Your New Home Purchase
Reverse mortgages have been around for a while. You’ve likely heard of them via television commercials and online ads. These are loans based on how much equity (or value) you have in your current home. If you completely own your home and the current market value is $250,000, then you have $250,000 in equity that you can borrow against. You won’t have to make a monthly payment for this loan, which can really help with seniors on limited budgets. Plus, you can use a reverse mortgage to buy your new home.
In the past, conventional wisdom said such loans were a bad idea. But these days, more and more people are getting reverse mortgages in order to make retirement life easier and even downsize to a more manageable home. In fact, the US government’s Department of Housing and Urban Development has a Home Equity Conversion Mortgage (HECM) program specifically for people over 62 years old, which can make taking advantage of this financing option so much easier and secure.
As a senior, buying a new home can be a major change. But for many, it’s a welcome one. You just need to figure out the financial aspects, plan accordingly for your move, and take the time to find the perfect home for your golden years. Hopefully, the tips above will help you do just that!