Downsizing is a popular term used when a homeowner sells their existing home in order to buy another home that is smaller. The reasons for downsizing may include a decrease in the household’s size, a desire to change locations, or financial necessity.
The homeowner who is downsizing must make an important decision before selling their existing home. Should you buy a home or rent when downsizing?
❓ When should I downsize?
Some homeowners decide to downsize when their children are grown and no longer live at home. They are still 50 – 60 years old and feel that the space they needed when their family was growing up in no longer needed.
There are times when the need to downsize is brought on by health concerns or the desire to have less to be responsible for when it comes to home and yard maintenance. When the home’s equity is sufficient to fund retirement and homeowners do not have enough pension to support the retirement lifestyle they want, they may decide to sell their home.
➕ What are the benefits of downsizing?
Below are some benefits of downsizing:
- It generates more income
- Results in less home maintenance
- Enables you to move closer to your family and friends
- High retirement savings and low home insurance payments
- Reduces a mortgage
➖ What are the downsides of downsizing?
If you’re thinking about downsizing, you should be prepared for the emotional side of the sale process. You may have a lifetime of memories that make it difficult to move on to another home.
You may find that it’s expensive to move into a smaller property that is in your desired location and getting used to a smaller space can be a challenge to some people. Downsizing may mean a change in location that takes you further away from family and friends.
🏘️ Should I rent a home instead of buying?
➕ What are the benefits of renting?
One of the benefits of renting over buying a new home is that you don’t have the long-term commitment to living in one location. Because you are renting, you can move or travel without being tied down to one place.
If you choose to rent a home in a 55+ or senior-centered community, you can enjoy all the amenities of things like a fitness center, parking garage, and community activities. Because you live in a home that is owned by someone else, you are free from the responsibility of fixing things that break or need replacement.
➖ What are the downsides of renting?
It’s not unusual for rent to increase over time, so you’ll want to be aware of that and discuss terms with the landlord. You’ll also not have any tax deductions that you may be used to claiming each year on your federal return.
Depending on where you rent, you could have less privacy than you are used to having in a home you own. When it comes to pets, you may find rentals less accommodating and with restrictions on breed and size.