Move Down Buyers
You Now Have An Agent!
Your personal HOME ADVANTAGE agent can help you every step of the way with downsizing to another home.
Looking to retire?
The kids are safely out on their own and retirement is at hand. If you’re planning to sell your existing home for something smaller and easier to maintain, the first issue you’ll need to tackle is how you’ll finance the new house.
Should you pay cash for your new house? Can your money earn more in other investments?
Most downsizers no longer need to worry about taxes. For couples filing jointly who have lived in their home for at least two of the five years leading up to the sale, $500,000 in profit is tax-free. Many downsizers who are flush with cash from the sale of their old home, choose to buy their new home outright, freeing themselves from monthly mortgage payments. Although this might sound attractive, it may not be your best option, especially if you consider the tax benefits.
Using a normal mortgage or a reverse mortgage versus paying a large down payment or cash for a home can provide you with increased liquidity by not tying up cash in real estate.
Keep in mind, though, that qualifying for a mortgage as a retiree can be more difficult than qualifying during your working days. And your estate-planning goals may also influence how you decide to pay for your new home.
Before you make a commitment to pay cash or borrow, run your ideas by your financial advisor and/or tax advisor to make sure it complements your overall plan and doesn’t create problems for your heirs.
