Posted on Feb 24, 2020 in Assisted Living
Making the switch to assisted living is a major adjustment for anyone, which is why each decision that goes into the process is such a big deal. Finding the right assisted living community is a huge weight off your shoulders, but then you’re left with another big question: what to do with your family home. Trying to decide whether to sell it now or wait may still weigh on you, especially since this decision is as emotional as it is practical.
If you’re like most retirees, your home is probably one of the largest financial assets you have. As long as you remain a homeowner, that value is tied up in the property, but selling makes that value liquid and gives you the opportunity to invest in other ways or cover the cost of assisted living. Some seniors need the financial freedom that comes from selling, whereas others simply want the flexibility of having access to that money.
Regardless of your situation, the first thing anyone should recognize before deciding whether to sell is that home values fluctuate. That’s why we suggest looking into how much your home is worth, which is easy to do using the PennyMac home value estimator. This tool is designed to account for local market conditions, and a full report should include area homes that have sold recently so you can compare your home’s value to others that may be on the market.
Knowing your home’s value will give you a better idea of what you can make from selling now, but the other factor to consider is how much equity you have. If you still have a mortgage, the amount you owe will cut into the cash value you net from selling. In addition to calculating the amount of equity you have, AARP recommends asking a real estate agent to help you estimate how much you would make after accounting for brokerage fees, as well as how much you should budget for any repairs that need to be made before selling.
Getting an idea of how much you will net from selling won’t make or break your decision, but it’s worth considering how that figure impacts your options. For example, if you have a good amount of equity and market conditions are ideal for selling, you may want to free up that money and get rid of the obligations of home ownership.
On the other hand, keeping your home will allow you to continue building equity, leaving you with a greater asset to eventually leave to family. You may even want to use your home as a rental property to generate extra income once you move to assisted living. This can be a good move financially, but make sure you consider whether you will need a property manager to handle upkeep and rental relationships, as this additional expense will impact your bottom line.
Another key factor to consider is how having debt will affect your overall financial picture later in life. It’s important to ensure that having a mortgage won’t negatively impact your ability to pay for medical bills and other major expenses.
One of the first things any downsizing senior should think about is what your motivation is for selling. By moving to assisted living, you’re not just downsizing the space where you live; you’re also downsizing life, which means fewer burdens and responsibilities. Owning a home comes with the financial costs of maintenance, plus the headaches of having to deal with upkeep.
You’ve made a major investment in your home over the years, so it’s only natural to weigh this decision carefully. So, how do you know if the timing is right to sell? The short answer is that the “right” timing is highly individual. However, considering all of these factors, and how each one might impact your financial situation, is the smart way to find the answer that feels right to you.
If you are interested in learning more about senior living, or have noticed that having extra hands helping with laundry, cooking and more could be beneficial, contact us at Landmark Senior Living. We are ready to help you transition to the next phase in your life, or answer any questions you might have about the process.