Cashing Out When Downsizing Your Home
The kids are out of the house, up-keeping the home has begun to take more and more time, and you're looking for a setting where you can live smooth and easy. Do these symptoms sound familiar? Downsizing your home often gives homeowners a big break after decades of cash tied up in equity. When you sell your home, you've got tons of purchasing power that most home buyers don't - this means striking better deals and beating out competitors. You may also have enough cash left over to use as a buffer between you and your retirement savings. How does all of this magic happen? (1)Make the following 5 smart moves and (2) work with a realtor who knows the ins and outs of the area you're looking to downsize to.
1. Stage Your Home
The most minimal and cost-friendly upgrades can make all the difference. Replacing old, out-dated bedding and bath towels, for example, can give your home a new look with minimal effort. Also, remove clutter that you have held on to for a decade or more - put it away in storage or get rid of it completely. De-cluttering will also make life easier when moving into your smaller home!
If you've got a higher-priced home, you might want to look into getting a professional stager. A stager can really shine new light on your home and help get you top dollar. Costs for hiring a stager can vary, but a NAR survey revealed a median cost to be $675. The NAR survey also revealed that 90% of sellers' agents said staging resulted in an increase in price buyers would pay.
2. Consider a Town House or Condo
If you're looking to keep more of your cash for retirement savings, consider moving into a town home or condo. Prices for these rose just 3.1% in 2015, NAR says, vs. the 7.2% growth among single-family homes. Other perks, besides more money in your pocket, include less upkeep - landscaping, repairs and service to major appliances, and more.
Though, town houses and condos do have some drawbacks.; the biggest being high HOA fees and surprise costs. Working with a realtor who knows the ins and outs of the area you're looking to downsize to can help with avoiding some of those surprise costs.
3. Build a Mortgage That Is The Right Size For You
Cashing out your home puts money in your pocket, and this means you can put down a larger down payment which will reduce your monthly mortgage. Were you thinking of paying off your new home? Think again! Having a mortgage at this stage in life isn't a bad idea, as 30-year loan rates are below 4%, and it's tax deductible.
4. Take On Cosmetic Repairs
This is where purchasing power and time come together to strike gold. The likelihood of finding a real bargain in a home that is perfect for you is high if you are willing to take on some cosmetic upgrades.
You can find bargains because younger buyers are still trying to find their way in life and cannot take on such a project. Also, you most likely have more time at hand to manage a contractor who will make the needed cosmetic repairs. In turn, the money you save on the new home because of its cosmetic shortcomings will almost always keep you well under what you would have paid if the home was up to par. What kind of numbers can you expect? NAR survey found savings of 15% to 55% for homebuyers who opted to buy a fixer-upper.
5. Try It On For Size Before You Buy
Have a particular square footage or home style in mind? Don't rush into something you might deem unfitting later on. Consider renting something with the square footage you have in mind. You may find that it's just not enough space for you, or that the style of home wasn't quite what you needed.