Yahoo Finance 5 Reasons Retirees Shouldn’t Sell Their Homes in 2024
Retirement should be enjoyable and stress-free. You certainly don’t want to have any worries about your housing situation.
You’ve reached the age where you might consider selling your home for a number of reasons: you might want to experience living in a new place or you might want to downsize, for example. In a recent report from Clever Real Estate, 10% of surveyed retirees reported considering selling their home in retirement as a way to save money and cover retirement costs.
However, there are a number of factors you’ll need to consider before making the big decision to sell your home as a retiree.
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You’re Already Locked in at a Low Interest Rate
Mortgage rates post-pandemic have skyrocketed, reaching heights of almost 8%. If you’re a retiree who was fortunate enough to lock in a low interest rate of about 2% to 3% pre-pandemic, you might want to think carefully before selling your home.
Selling in this market could mean you’ll be locked into a mortgage with a much higher interest rate if you purchase a new home, which can put a strain on your finances especially if you don’t already have sufficient equity in your home.
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There’s a Limited Housing Stock
Housing supply is stagnant and the production of new homes isn’t keeping up with increased demand across the U.S. This has led to property bidding wars and is one of the factors that has driven mortgage rates up. You might want to stay put and age in place to ensure predictable monthly housing costs.
You Have an Emotional Attachment to Your Home
Money aside, you might have an emotional attachment to your home. Maybe it’s where you and your spouse started your life together or it’s where your children were born and raised. If you can comfortably afford to live where you’re already living without putting your finances in jeopardy, staying put might be a better choice for your soul.
Current Mortgage Rates Are High
The Federal Reserve Bank of St. Louis indicated that as of June 27, 2024, the current 30-year fixed-rate mortgage average in the U.S. was 6.86%. While that’s not as high as it was when rates peaked post-pandemic, it’s still a very high interest rate which will result in a larger than normal monthly payment. You’ll especially want to think twice if you’re locked into a lower, pre-pandemic interest rate.
You Don’t Have Enough Equity in Your Home
Before selling your home, check to see how much equity you have in your home since you started paying your mortgage. Selling your home with a low percentage of equity can mean that you have less money to put towards the cost of a new home. As a general rule of thumb, it’s best to have about 10% equity in your home if you’re selling to relocate and at least 15% equity if you want to upgrade to a bigger home.
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This article originally appeared on GOBankingRates.com: 5 Reasons Retirees Shouldn’t Sell Their Homes in 2024
