Downsizing in a Seller’s Market

 

 

 

 

Is it time to sell your big house in the near future and scale down?  How does this make sense when the majority of the country is currently experiencing a seller’s market?

In a blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

  1. A smaller home means less space, but it also means less time, stress and money spent on upkeep.
  2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years or leave to your kids.
  3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in an article. They suggest that you ask yourself these questions before deciding if downsizing is right for you and your family.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Many homeowners are taking the profits from the sales of their current homes and splitting it in order to put down payments on smaller homes in their current locations, as well as on vacation/retirement homes where they plan to live when they retire. This allows them to lock in the home price and mortgage interest rate at today’s values which makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’s latest Equity Report revealed that 78.9% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamed of.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, please call me to help guide you through the process.  I’ve helped with this same move for many of my clients & friends!

 

Cary Perkins,
Windermere Top Producer
Fun With Real Estate
Current Portland Oregon Real Estate Information,
Highlights of Portland Oregon, House Ideas
Portland Oregon Homes

by Cary Perkins & Keeping Current Matters

Portland Real Estate, Portland Oregon Top Producer, Windermere Top Producer, Portland Realtor, Portland Homes for Sale

Windermere Top Producer Cary Perkins, Top Westside Broker

Posted on March 21, 2017 at 4:14 pm
Cary Perkins | Category: Best Time to Sell Your House, buying a home, Downsizing | Tagged , , ,

Importance of Loan Pre-Approval….especially in 2017

 

 

 

 

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets, such as Portland’s. 

One of the many advantages of working with a local real estate professional is that we have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

NEW IN 2017 – New language in the Residential Real Estate Sale Agreement requires notice of intent to proceed with the loan transaction within 3-10 days (as specified by buyer when writing an offer) and buyer’s agent must formally notify the seller.  This new timeline makes it crucial that you understand this is no time to jump ship and decide to try a new lender.  There is a short window in which to revise your loan and renegotiate your position with the seller, but the seller is not obligated to agree, and you may find your transaction terminated. 

BOTTOM LINEMany potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.  And once you’ve written an offer, it may be too late to revise your strategy on lenders and loan programs.  So take this process seriously and weigh your options carefully.

 

Cary Perkins, Windermere Top Producer
FINE PORTLAND LIVING
Current Portland Oregon Real Estate Information,
Highlights of Portland Oregon, House Ideas
Portland Oregon Homes

by Cary Perkins

Portland Real Estate, Portland Oregon Top Producer, Windermere Top Producer, Portland Realtor, Portland Homes for Sale

Windermere Top Producer Cary Perkin

Posted on January 16, 2017 at 5:31 pm
Cary Perkins | Category: buying a home, Current Portland Real Estate Market Information, Portland Oregon Real Estate, real estate loan approval | Tagged , ,