Downsizing is a common trend, and not just for those in their later years. There are many benefits to living in a smaller home. Reducing costs is perhaps the obvious one, but they’re also easier to clean and maintain, and you’re more likely to have a stress-free life. Learning to live a more minimal lifestyle is better for your well-being. You can then spend the money you’ve saved on your hobbies and enjoying yourselves. For downsizing to be as profitable as possible, you need to run the numbers first, however. Here are five tips for downsizing to a smaller home in retirement.
Find out the true value of your home
Be careful not to overestimate the current value of your home. Take into consideration all your remaining mortgage payments and outstanding loans such as a reverse mortgage. You can research house prices online to find out the estimated value of your home. Shop around and speak to a few different realtors before you settle for one. See who can offer you the better deal.
List your priorities
Before you can find the right house, you need to list your priorities. Unfortunately, no home or neighborhood is 100% perfect and you’ll need to prioritize certain amenities according to your budget. Consider the location as well. Perhaps you’d prefer to buy a retirement home near the coast, or in a smaller town. If you’re planning on moving to a new area ensure you do your research. Find out if it has the necessary amenities and services for your desired lifestyle.
Research recent sales prices
Browse online and check out average house prices for the area you’re looking in. This will give you a relatively clear indication of how much your new home might cost. You can then give a realistic estimate to your realtor. It’s important to run the numbers as house prices depend on many factors, particularly location. You might be able to get a better deal if you relocate.
Understand your tax benefits
There are plenty of tax breaks for seniors that only increase over the age of 65. Find out what you’re entitled to and you just might be able to save a little more money during your retirement. There are also unfortunately tax implications relating to selling and buying real estate. It’s important to ensure you are fully aware of any hidden costs or future interest rates.
Speak to a financial advisor
If you’re considering selling and moving to a smaller home it’s always recommended to seek professional advice. You could hire an independent advisor to help you make the most profit from downsizing. If you’re still on the fence about the idea, there are several websites for free financial advice you can try before investing. Do your research and get as informed as possible. Selling your house is never a decision to be made lightly. If you’re smart about it, however, downsizing to a smaller home can be a way to free up extra cash for retirement. You may even get more tips for downsizing to a smaller home when speaking to a financial advisor.