Downsizing

Trading Down. 

From This:     TO This:   

I have a client who is downsizing.  The first question that comes in financing the new  home.   Should she pay for it outright, freeing herself from monthly payments or  put a small amount down and invest the rest of the money from the house. 

It sounds attractive to pay off her home.  But  as I told her she should run the number.  If she puts 20% down and invests the other in a balanced portfolio of  stocks & bonds, how much would she save over the life of the loan.  Then compare that to no payments, and tax implications.  I indicated that there are on line calculators that you can run the numbers.

As I advised here before she make a commitment to pay cash or borrow, run the proposal by an estate lawyer to make sure it complements her overall plan and doesn't create problems for her heirs