1- What kind of lifestyle would I like?
Since most people who downsize tend to use the profits half for the downpayment of their new, smaller home and half for vacations and putting away for a retirement home, to ask yourself this is to ask if you’re ready to move onto a new stage in life where you treat yourself to exploring or having extra money for later! This is also beneficial financially since home prices and interest rates are going to rise, downsize now to take advantage of a good deal!
2- Do I have enough equity?
CoreLogic’s latest report shows that 78% of people have a 20%+ equity on their homes so the answer is, most likely, yes. This and the market being right in the seller’s hands to make more money off of their homes now! If these questions still have you wondering, Dave Ramsey, a financial guru blogger, has this to say about the financial advantage of downsizing now:
A smaller home means less space, less time, less stress and less money spent on upkeep. If you have a $500 a month on your mortgage payment, in 30 years, you could have an additional $1–1.6 million in the bank! Using the proceeds from selling your current home to pay cash for a smaller on, imagine what you could do with no mortgage! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. If you apply the $500 you saved from downsizing to your new monthly payment, at 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000!