Is this a good time to downsize?
My interest is 3.5% right now.
With a 3.5% interest rate, you're in a favorable position compared to today's higher mortgage rates, which have risen significantly. Deciding to downsize now depends on several factors:
Current Market Conditions: In many areas, home prices remain high, but inventory is low. Selling your home now could result in a significant profit, especially if your home is in high demand. However, if you're buying a new property, you may have to contend with higher prices and mortgage rates.
Mortgage Rate Comparison: If you downsize and take out a new mortgage, it will likely come at a much higher rate than your current 3.5%. If your new home requires a mortgage, this could increase your monthly payments even on a smaller home, negating some of the savings from downsizing.
Cash Buyers Advantage: If you can downsize without taking out a new mortgage (e.g., by buying the next property outright with proceeds from your current home), you would avoid higher interest rates and capitalize on your current equity.
Personal Timing: If downsizing aligns with your life changes, such as retirement, lifestyle simplification, or reducing maintenance costs, it might still be worth considering despite higher rates.
In short, unless you're in a position to buy with cash, your low 3.5% rate is a significant advantage to keep in mind before downsizing. You may want to assess how a new mortgage at today's rates would impact your finances.
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