So, the kids have left home to live on their own, and you are all alone with your spouse. The house feels empty, and the silence echoes in the rooms. You want to move to a smaller home, but your spouse wants to keep the house in case the grandkids visit. Can you afford to keep a large house, or is it better to move to a smaller home and look for a tiny guest room for the grandkids?
Consider your budget
Keeping your home may be better if you are flushed with cash and not hurting for money, especially if it has sentimental value. But if you are short on savings and looking to beef up your retirement fund, selling the house may be the more financially sound decision. According to a Merrill Lynch study, 51 percent of homeowners who downsize are retirees.
Consider the market
The Federal Reserve Board has said it needs more data before implementing interest rate cuts. While the job market is starting to cool, the housing market continues contributing to high inflation. Prices have hardly budged, and interest rates on home loans are still high.
If more positive data emerges, the Fed can begin easing rates later in the year. If that happens, consider downsizing, especially if you find a good deal.
Buy or sell first?
It is usually better to sell first before buying a new home. However, that may only sometimes be the case, and you may need to buy first if a great deal pops up. Whether buying or selling, you must discuss this with your spouse, real estate agent and lawyer. Talking things over with everyone will ensure you make the best decision.