Senior homeowners like yourself face specific challenges. One such problem is the struggle to keep up with home maintenance and expenses on a fixed or reduced income. In some cases, seniors on fixed incomes may find it impossible to keep up with the mortgage payments of their longtime home on top of taxes, insurance, repairs and general upkeep of a house. If this sounds familiar to you, you may have already begun thinking of your options, such as a reverse mortgage or selling your home and downsizing to a more manageable property, rental home or a retirement community.
But, which option might be the best for you? The answer may surprise you. Keep reading to learn more about why downsizing is probably the best option for most senior homeowners in the San Gabriel Valley.
Some benefits of downsizing
It happens to everyone; as we age, our bodies may not be as forgiving as they once were when it comes to the physical labor that comes along with home maintenance. Activities like yard work, gutter cleaning, painting and the like become challenging to perform and may be too expensive to shell out for professionals to accomplish. Selling your home and downsizing to a lower-maintenance home will free you from these arduous tasks.
If you raised your family in the home you’re currently in, you may also find that there is just more room than you really need and are spending time cleaning rooms that are underused. Downsizing is a perfect way to get back into a home that is sized just right for you.
Also, depending on the value of your home and the housing market in your area, selling your home may net you a significant sum of money that you can use to fund your retirement, pay the lease at an attractive retirement community, or save for your family. Speak to a real estate professional to get an idea of how likely it is that you might be able to sell your home for a profit.
Downsizing can save you money due to a lowered mortgage payment, lower taxes, and lower bills for utilities and maintenance. Not only that, but you may have a better quality of life due to the fact that your home will be easier to clean, which will free you up for activities that improve life, like socializing, hobbies, and spending more time outdoors. You will also have to downsize your possessions, which isn’t as painful as it sounds, we promise! Many people who downsize are often shocked by how much stuff they have accumulated over the years; going through everything and keeping only what is truly important to you can be a liberating experience.
In many ways, downsizing your home may result in a fresh start on a new, more positive lifestyle that will allow you to be more involved with the things you enjoy as you get older.
But what if I don’t want to sell?
There may be many reasons why selling and downsizing isn’t initially attractive, all of which are valid. It is perfectly understandable to have a sentimental attachment to a home or to want to keep your house in your family. Many senior homeowners in this boat consider a reverse mortgage. This may not work for all families but may be worth looking into for some.
What is a reverse mortgage, anyway?
Reverse mortgages are financial products available to homeowners 62 or older that allow them to tap into the equity of their homes. To qualify, you must have accumulated home equity and satisfy a number of other stipulations, like owning your home free and clear or only have a small amount left to pay.
Unlike a traditional mortgage, in the case of reverse mortgages, the lender can pay you in several ways, such as a lump sum, monthly installments, or a line of credit. You can use the money for anything, but most reverse mortgage borrowers use the funds to supplement their income, pay the taxes and insurance on their homes, or cover the cost of repairs. A reverse mortgage does not need to be repaid until the homeowner moves or passes away.
Some cautions of reverse mortgages
First, not all homeowners will qualify. Working with a loan professional to find out if you are eligible may be time-consuming and confusing.
If keeping your home in your family is important to you, a reverse mortgage may put your dream in jeopardy. Once you have moved out of the house or have passed on, the loan comes due. Your heirs can pay off the mortgage to take ownership of the home; however, if they are not able to pay the loan, they may need to sell the house to pay off the reverse mortgage debt. This is especially likely if you had the reverse mortgage for several years, as the balance due on the loan only increases over time.
If you are considering a reverse mortgage, discuss it thoroughly with your family members, as they will be directly affected once you pass on.
How to downsize and still keep your home in the family.
If keeping your home in your family once you’re no longer able to live in it is important to you, then you should consider a couple of other options besides a reverse mortgage.
- Sell the home to your children and downsize by moving into a smaller, affordable, low-maintenance house such as an apartment or retirement community.
- Sell the home to your children for them to utilize as an investment property, then stay in the house as a renter, with the understanding that they will then help with the maintenance you can no longer perform.
Try to remember that every homeowner’s situation and budget is different. For that reason, you need the help of a dedicated real estate professional. Let us use our expertise to help you find the best option for your needs. We can help you figure out how to downsize in a way that makes sense for you and your family. Give us a call or an email today to get started.