Seniors Can Benefit from Downsizing Their Home
If you're a senior who wishes to "age in place," you may find that your current home just isn't suitable. Perhaps there is too much unused space, or climbing up and down the basement stairs to do laundry is becoming hazardous. Maybe you've accumulated a lifetime's worth of belongings that you're ready to purge in favor of a more simplistic, less cluttered home environment. If your goal is to be able to age in place comfortably, downsizing to a smaller home may be just the answer you are looking for. Whatever your reason for moving, it's important to know that you aren't stuck where you currently live. Despite what you may have heard, there's no reason why a senior in their 60s, 70s, or even older can't purchase a new home and enjoy the accompanying benefits.
Lower your payments
One of the largest benefits of downsizing is the decreased expenses. In general, your mortgage payment is typically your largest expense, accounting for 30 percent or more of your gross income. By downsizing, you not only lower your mortgage payment, but increase your free cash flow and save on interest throughout the term of your mortgage.
If you're really lucky, you'll completely opt out of the mortgage and pay off your home using the profit from the sale of your home. After mortgages, real estate taxes are the second largest expense you incur, but by lowering your square footage, you decrease your taxable real estate. For example, a 3,000-square-foot home assessed at $250,000 and taxed at a 30-mills-tax rate will pay about $7,500 in taxes, while a 1,500-square-foot home assessed at $100,000 and taxed at the same rate will pay about $3,000 in taxes. This equates to more than a 50 percent reduction in your tax liability. Downsizing also offers the opportunity to lower your utility bills, as less space to heat and cool equates to much smaller charges.
Enhance quality of life
Lowering your expenses is great, but downsizing also reduces the time you spend on maintenance. There will be fewer surfaces to clean and a smaller yard to cut, reducing the wear and tear on your body and giving you more time to dabble in new hobbies or spend time with family and friends. In the event that repairs must be made, a new roof or fresh coat of paint won't cost you nearly as much now that you have less house. You can use the savings to make upgrades to enhance your ability to safely age in place, such as installing grab bars in the bathroom, a shower/tub without a curb, or widened hallways and entryways. The primary purpose of downsizing is so that you can continue to live in your home as long as possible, and home modifications will only enhance that ability.
Finance your choice
You've seen the benefits of downsizing, but how are you going to finance this new endeavor? Before purchasing a new home, you'll need to figure out what you can afford. If you're looking to take out a traditional mortgage loan to pay for your new home, you may face some barriers getting approved. Most lenders will require some steady form of income in order to approve your traditional mortgage. This is no problem for some seniors, but if you're living on a fixed income with no real income stream, you may face problems. If you're already paying a mortgage on your current home, it shouldn't be an issue, but if you've been living without mortgage payments for some time, the added stress on your budget could prove overwhelming.
Downsizing has proven to be extremely beneficial to seniors looking to remain safely and comfortably in their home. With the right financial plan, you'll enjoy lower expenses and more time to pursue the things you enjoy. Start enjoying your golden years with a home that works for you!