It’s a bittersweet time in life when the kids are all grown up and out of the family home. It’s nice to have more time for yourself, but the house sure starts to feel awfully big with fewer people at home. It may be time to consider downsizing to a smaller property that better suits your housing needs as empty nesters.
Why It May Be Time to Downsize
Downsizing makes a lot of sense for homeowners heading into their retirement years. On the practical side, you don’t really need such a large house anymore. And when it comes to the financial side of things, it can be much better for your budget to have a smaller place. Many of us have to tighten up the spending after retiring and learning to live on more fixed income. A less expensive living situation is a good first step.
You may have lower mortgage payments, or be able to pay off the smaller home completely using the equity from your other house. And of course, other living expenses and ownership costs (property taxes, insurance, maintenance, etc.) tend to go down with the size of the property.
How and When to Sell Your Family Home
Making this decision to downsize and sell a family home can be difficult. You’ve likely made an emotional connection with the house. It’s where you raised your kids and created so many lasting memories together. Ultimately, the logical decision will have to be made. Market demand for nice houses in good neighborhoods will be strong no matter when you sell. There are always qualified buyers out there looking for these types of properties. They are starting their own families or outgrowing their own starter homes.
Consult with a local real estate agent and take the necessary steps to prepare your home for sale. You may want to invest some time and money to make any necessary repairs or strategic upgrades that can help increase the resale value. Today’s buyers are looking for features like energy efficiency and smart appliances. They are also looking for more adaptable in-home spaces that can be used for home offices, home gyms and multi-generational living.
Utilize Your Home Equity
Assuming you’ve been living in your family home for awhile and have kept up with your mortgage payments, you probably have a great deal of equity built up in the property. It is worth much more than you still owe—if you owe anything on your mortgage at all. This gives you quite a bit of leverage when getting ready to buy or sell.
When it comes to repairs and upgrades as mentioned above, you can consider taking out a home equity line of credit (HELOC). An equity loan can help cover those home improvement investments if you don’t have enough cash already available. Or, you leave all the equity in the property until it is sold. Then, you have all that cash equity that can be applied toward your next home purchase. You may be able to find a smaller home or condo that you can buy with this money, or at least apply a large down payment to minimize mortgage payments with a lower interest rate and shorter repayment period.
Some of your home equity could also help your family. It may be valuable for covering college expenses, wedding costs or helping one of your children buy their own first home. Real estate is an excellent financial asset. The appreciation earned from a house you’ve been in a long time can really go a long way if you are smart with how you use it.
What to Look for When Downsizing
You will want to think about where you are moving and what housing situation will suit you best for your retirement years. You may even end up with multiple properties for the seasonal “snowbird” lifestyle. It is very important to plan your move and prioritize your housing needs. You are giving up size and space by moving to a smaller home, but that doesn’t mean you should sacrifice home features that are meaningful to you.
Location is another major factor to consider when downsizing. You may be moving to an entirely new area. Be prepared for that transition and find a location that fits your lifestyle and your budget.
These are some of the best tips for empty nesters planning to downsize for retirement. If you are selling a house in Southeastern Pennsylvania or Northern Delaware—or if you are looking to buy in this area—contact The Cyr Team for a private real estate consultation. We’ve worked with many empty nesters throughout the years and can help you make the right real estate decisions. In fact, we are empty nesters ourselves, so we know exactly what you are going through!