Moving UP or DOWN

By
Real Estate Broker/Owner with Morningside Homes, LLC 720-231-5200 DRE# ER300941

 

Staying at home in 2020 caused of lot of owners to think about how nice it would be to have a larger home to accommodate the additional activities that come along with isolating.  Particularly for people with children at home or possibly, the potential of either adult children or parents coming to live with them.

There are other owners who are trying to weigh the pros and cons of selling their larger home and downsizing.  For entirely different reasons, the advantages could be very appealing to an owner.  A smaller home is easier to maintain and usually, has lower utilities, insurance, and property taxes.

Some people might be considering the convenience and ease of mobility of a single level home.  It may be finding a location with proximity to the activities they are now interested in.  A newer home might have less maintenance and be more energy efficient.

Married taxpayers who have owned and occupied a principal residence for two years can exclude up to $500,000 of capital gain while a single taxpayer can exclude up to $250,000.  Liquidating the equity in their home without a tax liability could have multiple benefits.

Some people might choose to pay cash for the replacement home.  Others might put 20% down to avoid mortgage insurance and possibly, even get a 15-year loan to get the lowest rate.  The balance of the equity could be invested at a rate higher than the interest on their new mortgage.  Still, others might want to have some reserve funds available for whatever the next unanticipated crisis might be.

It could be a way to fund a longtime goal like children's or grandchildren's education, or wedding, or a once-in-a-lifetime trip.  Maybe part of the equity could be used to start a business or make a grant to a worthwhile charity.

Selling a home and purchasing another will have expenses involved that have to be taken into consideration.  Purchase costs could be 1.5 to 3% while sales expenses could be easily be 2.5 times that much.

Regardless of whether it is moving to a larger home or a smaller one, now is a good time to make the move.  Due to the low inventory in most markets, homes are selling quickly, many times, in less than three weeks.  Normally, the winter months have less activity which means less competition also.

And then, there are the mortgage rates.  As of 1/21/21, the 30-year fixed rate was at 2.77% and the 15-year at 2.21%.

Like any other big change in life, it is recommended that you take your time to consider the possible alternatives and outcomes.  Your real estate professional can provide information that can be valuable in the discernment process such as what your home is worth, what you will net from a sale as well as, alternative properties for your next stage in life.
Posted by

Buy or Sell with Patty Clark              Denver/Aurora Co. and surrounding areas 

Chris and Patty

    Helping Families Move with Care

  If you would like to be sent properties on a daily or weekly  basis just call or email me and let me know your wants and needs. A match will be made with a home you love and with monthly payments you can afford. I specialize in first time home buyers and sellers who are

          ready to downsize or move to a larger home as the family grows

     

                                                     Morningside Homes, LLC

patty@morningsidehomes.com

www.morningsidehomes.com
Cell: 720-231-5200                       CRS,GRI,WCR,SFR,CNE, MRE

 

Comments (1)

Doug Dawes
Keller Williams Realty - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Hi Patty Clark 

Downsizing brings about many questions and you have addressed some big ones such as capital gains and current interest rates.

Feb 01, 2021 04:13 PM

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