Smart About Money: Why leave the home you love?

I recently met with a couple in their very early 70s who were starting to think about downsizing. Why? Basically, because they were under the impression that it was “what everyone did,” that it was the “right thing to do” and they wanted to be “prudent.” They were considering buying a condo and were wondering if it would be better to get a small mortgage or pay cash.

As we got talking, they told me they loved their home. The property was debt-free except for a small equity loan. And they had recently done some major maintenance, including a new heating/air conditioning system and a new roof.

They admitted that, with three bedrooms, the house was a little big for their current needs. But not so big that they felt lost in it. Quite the opposite! Now that their kids were grown and gone, this couple was actually enjoying using all the extra space.

As I saw it, they actually had five options, each with various pros and cons.

They could move to a condo. But the condos they’d looked at cost almost as much as what their house would sell for. They’d still have all the costs of ownership — property taxes and unit upkeep — plus condo fees and unpredictable and unavoidable assessments for major improvements. So that idea seemed like a wash financially.

Another possibility was moving to a smaller house. But demand for smaller/starter houses is very high in this area. In fact, this couple told me they had looked but couldn’t find anything except serious fixer-uppers at a price that made moving worthwhile. They didn’t want to take on major renovation projects just to downsize.

We talked about renting. It turns out the condo complex they visited had rentals available. And the math on renting was very favorable. They could get a spacious two-bedroom for about $2,700 a month. That’s a big number. But without the property taxes or upkeep they now had with their house or the condo fees and assessments they would have with a condo, their monthly “bottom line” would be about $1,000 less.

The rent for the condo was well within their budget, and renting would give them a chance to “test-drive” condo living and that particular community.

Given their age, a 55+ development or independent-to-assisted living was also a possibility. But they thought that kind of transition was something they’d rather consider at some point in the future, maybe in about five to 10 years.

In the end, after some number-crunching and many serious conversations on their part, this couple decided that staying in their current home made the most sense financially and emotionally.

“It’s perfect for right now,” they said to me. And it was easy to believe they’d made the choice that was right for them.

Just because “everyone” has an opinion on what’s right for everyone else doesn’t mean the conventional wisdom is right for you. Take the time to map out all of your options and get professional advice if you need it to make those big decisions with confidence. Giving yourself your best chance for a happy outcome is always the right move. And the most prudent in the long run too.

Nick Maffeo is the president & CEO of Canton Co-operative Bank in Canton. Have a question? Email to submissions@thecantoncitizen.

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Posted by Nick Maffeo on Nov 4 2016. Filed under Featured Content, Opinion, Smart About Money. Both comments and pings are currently closed.