By Tom Cunningham, Northwest Suburbs Real Estate Agent
I recently met with a client who was on the fence about selling their home. They had locked in a 3.5% mortgage rate years ago and were hesitant to give it up. But their kids had just left for college, and their large home no longer suited their needs. They wanted to downsize to a more manageable ranch-style home, but the thought of moving to a 6.5% (give or take) mortgage rate made them nervous.
When we crunched the numbers, the results were eye-opening.
The Numbers: Sell and Downsize? Let’s Compare.
They purchased their current home 20 years ago for $485,000. Their neighbor recently sold a similar home for $825,000, meaning they’ve gained $340,000 in equity. The home they want to buy, a smaller ranch, is priced at $500,000. Their property taxes would decrease as well, from $12,000 per year to around $9,600.
| Category | Current Home | New Home |
| Home Value | $825,000 | $500,000 |
| Loan Amount | $485,000 | $160,000 |
| Mortgage Rate | 3.5% | 6.5% |
| Monthly Payment (P&I) | $2,177.87 | $1,011.31 |
| Property Taxes | $12,000/yr | $9,600/yr |
| Total Equity Gained | $340,000 | – |
Why This Makes Sense
They are cashing in on appreciation. Home values have increased significantly since they bought, allowing them to sell at a profit and reinvest in a home that fits their current needs.
They are lowering their monthly expenses. Even with a higher mortgage rate, a smaller loan amount and lower property taxes make their new home more affordable long-term.
They can always refinance. If mortgage rates drop in the future, they can refinance at a lower rate, bringing their payments down even further.
It’s the right move for their lifestyle. Their old home no longer fits their needs, and downsizing means less maintenance, fewer expenses, and a better quality of life.
What If You’re Buying for the First Time?
For first-time homebuyers, waiting could cost more than they realize. Home prices continue to rise, and what is affordable today may be out of reach in a year or two. The good news is that there are several first-time homebuyer incentives to help make homeownership more attainable. When you work with a real estate agent (Me!), we will work closely with my preferred lender to find the programs that are available to you.
Bottom Line: Should You Buy or Sell Real Estate?
If you’re thinking about moving, now is the right time to buy or sell real estate. You’re likely sitting on a substantial amount of equity. Whether you want to downsize, upsize, retire, or relocate, you can put that equity to work in a way that fits your lifestyle.
If you’re buying, home prices continue to rise. Buying now means securing today’s prices before they increase further. And remember, you can always refinance later if rates drop.
Thinking about buying or selling? Let’s talk. I’d love to help you make the best move for your future.
