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How Buyers Can Win By Downsizing in 2020

Wednesday, January 22, 2020   /   by Kevin Schumacher

How Buyers Can Win By Downsizing in 2020

Home values have been increasing for 93 consecutive months, according to the National Association of Realtors. If you’re a homeowner, particularly one looking to downsize your living space, that’s great news, as you’ve likely built significant equity in your home.


Here’s some more good news: mortgage rates are expected to remain low throughout 2020 at an average of 3.8% for a 30-year fixed-rate loan.


The combination of leveraging your growing equity and capitalizing on low rates could make a big difference in your housing plans this year.


How to Use Your Home Equity


For move-up buyers, the typical pattern for building financial stability and wealth through homeownership works this way: you buy a house and gain equity over several years of mortgage payments and price appreciation. You then take that equity from the sale of your house to make a down payment on your next home and repeat the process.


For homeowners ready to downsize, home equity can work in a slightly different way. What you choose to do depends in part upon your goals.


According to HousingWire.com, for some, the desire to downsize may be related to retirement plans or children aging out of the home. Others may be choosing to live in a smaller home to save money or simplify their lifestyle in a space that’s easier to clean and declutter. The reasons can vary greatly and by generation.


Those who choose to put their equity toward a new home have the opportunity to make a substantial down payment or maybe even to buy their next home in cash. This is incredibly valuable if your goal is to have a minimal mortgage payment or none at all.


A local real estate professional can help you evaluate your equity and how to use it wisely. If you’re planning to downsize, keep in mind that home prices are anticipated to continue rising in 2020, which could influence your choices.


The Impact of Low Mortgage Rates


Low mortgage rates can offset price hikes, so locking in while rates are low will be key. For many downsizing homeowners, a loan with a shorter term is ideal, so the balance can be reduced more quickly.


Interest rates on 10, 15, and 20-year loans are lower than the rates on a 30-year fixed-rate loan. If you’re downsizing your housing costs, you may prefer a shorter-term loan to pay off your home faster. This way, you can save thousands in interest payments over time.


Bottom Line


If you’re planning a transition into a smaller home, the twin trends of low mortgage rates and rising home equity can kickstart or boost your plans, especially if you’re anticipating retirement soon or just want to live in a smaller home that’s easier to maintain. Let’s get together today to explore your options.


  buyers, sellers, market trends, move up buyers, down payment, interest rates

The Kevin Schumacher Team at EXP Realty, LLC
1615 Foxtrail Drive, Ste 260
Loveland, CO 80538
720-230-3030

Information and Real Estate Services, LLC. Provided for limited non-commercial use only under IRES Rules. © 2020 IRES. Listing information is provided exclusively for consumers' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information deemed reliable but not guaranteed by the MLS or eXp Realty LLC. *Not intended to solicit buyers under buyers agency, not intended to solicit listings currently listed.*The statements and opinions contained in this advertisement are solely those of the individual author and do not necessarily reflect the positions or opinions of eXp Realty, LLC, or its subsidiaries or affiliates (the “Company”). The Company does not assume any responsibility for, nor does it warrant the accuracy, completeness or quality of the information provided.
Information and Real Estate Services, LLC. Provided for limited non-commercial use only under IRES Rules. © 2020 IRES. Listing information is provided exclusively for consumers' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data last updated October 29, 2020 2 AM. Information deemed reliable but not guaranteed by the MLS or Kevin Schumacher - The Kevin Schumacher Team / EXP Realty, LLC.
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