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    6 Tips On Downsizing For Retirement

    2/19/2016

    1 Comment

     
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    When people sell their homes, one in four buy a less expensive place for a simpler, more affordable life. But baby boomers appear reluctant to make that big step.
    So far boomers under age 65 have not been downsizing much. What’s keeping the take-to-the-highway Woodstock generation stuck? Lots of factors are making it difficult, some practical and some psychological, but the decision to downsize can be a good one. Here are six steps on how to make the most of less house:

    Step 1: Dream, research and strategize.
    Data from the National Association of Realtors shows downsizing overall hasn’t gone up significantly, despite the boomer population bulge. The real estate bust, stock market collapse and tighter lending have made it harder to make a move. But there are more tools than ever on the Internet, and more homebuying alternatives to consider in the search.

    Tip: Start by dreaming a bit. And think of different scenarios. What matters most? Will you trade low cost for convenience? Do you want the city? A rural life? Don’t lock in on one target too soon.

    Step 2: Start downsizing at home.
    The whole process of moving can take a long time. Start slimming down as soon as you can. It can be a good mental exercise, too. “Storage is one of the biggest issues,” says Casey Bond, managing editor of GoBankingRates.com and a U.S. News Money blogger. “Each of those decisions to get rid of things is difficult.” Tag sales and eBay auctions can raise cash, and donations make better tax deductions while you’re still salaried.

    Tip: Check your overstuffed bookshelves first. Do you still need those dusty college texts?

    Step 3: Sell your home before you buy.
    Home equity is critical for downsizing. The National Association of Realtors estimates that 80 percent of boomers own homes, and longtime homeowners are more likely to have equity. Banks these days usually aren’t willing to finance another home until you sell. So you will probably need to sell before you buy. “Try actually putting your home on the market early as a test so you can get an idea of what it’s worth,” says Brendon DeSimone, a Zillow real estate expert and blogger.

    Tip: Be ready to rent as an interim step

    Step 4: Consider real estate agents, and create an Internet presence.
    Make your home look its best, from the curb and online. Homebuying has moved to the Internet. “Anyone buying a home will know a lot about your property when they first walk through the door,” says Zillow’s DeSimone, who also works in New York and California as a real estate agent. Don’t neglect making a good online impression. Real estate agents are becoming staging consultants who can help you spruce up for your sale – both online and off.

    Tip: Agents interested in your listing are often willing to help with a no-cost consultation.

    Step 5: Make a detailed plan based on monthly payments.
    People who trade down move to a home worth $27,000 less than the one they sold on average, says Walter Molony, National Association of Realtors’ economic issues specialist. That’s not a huge difference in value. It means savings will come largely from lowering your monthly mortgage payments by using cash from selling your existing home. Other savings can come from reduced property taxes, maintenance and utilities. A detailed, fact-based plan can eliminate future costs.

    Tip: Prepare for the long term. 

    Step 6: Scout locations as the final step.
    This is the fun part. With everything else taken care of, you can turn those dreams into reality. Can you afford that Paris flat? What are property taxes in Alaska? How’s winter in Costa Rica? The median move is 71 miles for 65-plus movers. But 25 percent relocate more than 1,000 miles.
    ​

    Tip: Inexpensive travel and the Internet make it easier to move further away. But DeSimone says the trend for well-traveled, work-wearied boomers is toward smaller, walkable U.S. cities with well-furnished homes, high-speed Internet and accessible services – plus libraries to replace all of those books they dump in the downsizing.



    From: US News

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    1 Comment

    Should You Rent or Buy?

    2/5/2016

    0 Comments

     

    ​Many dream about owning a home, but consider monthly costs and how long you plan to stay before buying.

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    For many people, moving time means decision time: Do we buy a home or find a place to rent? This dilemma doesn’t just face young people starting out, but it also stumps established professionals relocating for a job and empty nesters who have sold the big family home.

    When it comes time to decide whether to buy or rent, a combination of practical and financial factors have to be considered.
    The real estate portal Trulia does a semiannual analysis on the cost of buying vs. the cost of renting. Its latest report, released in February, found that, on average, buying was 38 percent cheaper than renting nationwide. But looking at the 100 largest metro areas, the differential ranged from just 5 percent cheaper in Honolulu to 66 percent in Detroit.
    Calculators that will help you weigh whether to buy vs. rent are available at The New York Times, Bankrate.com and Trulia, among others. While these calculators ask how long you expect to live in the home, your tax bracket and even allow you to try on different scenarios, none of them take into account all of the personal factors that affect an individual’s decision.

    ​Try my Rent vs. Own Calculator


    Here are seven questions to ask yourself when determining whether buying or renting is best for you.
    How long do you expect to be in the home? The longer you plan to stay, the better off you are buying. That’s because buying and selling cost money – and require a significant amount of time and effort. If you plan to stay less than five years, you might want to rent instead.

    Would you be content if circumstances meant you had to stay longer? People who bought a “starter” home in 2005 thinking they could sell and buy a bigger home a few years down the road ended up stuck in homes that were worth less than they owed on their mortgages due to the housing crisis. Home prices are rising now, but there is no guarantee they will continue to rise, and the rate of increase has already slowed.

    How stable are your job and your life? If you’re in a declining industry and your job is not secure, you may not want to lock yourself into a mortgage or a city. If you’re involved in a romance with an out-of-town love, or considering relocation for other reasons, you may want to rent. Buying a house and selling it a year later to relocate is likely to cost you some money.

    How do the monthly costs compare? Do some realistic math. Make sure you consider all the monthly costs of owning, including property taxes, insurance, homeowner or condo fees, lawn maintenance and other regular costs. Utility costs also may be higher if you buy, since many rents include water service and garage collection.

    Do you have savings for a down payment? It’s possible to buy a house with as little as 3.5 percent down payment with a Federal Housing Administration mortgage. But in a competitive market, you may find sellers choosing offers with higher down payments and fewer contingencies. Plus, a higher down payment means a lower mortgage payment and no private mortgage insurance.

    Do you have savings to pay for repairs? All homes, even new homes, sometimes need repairs. Water heaters break, pipes leak and termites periodically drop by to wreak havoc on your home. Condo dwellers aren’t immune because they can face sometimes hefty assessments to pay for repairs to the entire building.
    ​

    Would you be better off financially if you spent the money elsewhere? If you spend your savings on a down payment for a home, that money is no longer earning money for you. Depending on how it’s invested, you might be better off financially renting and using your discretionary cash for investments. Consider the alternatives and do some math to determine which route is best for you. 


    From: US News
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