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MORTGAGE KNOWLEDGE CENTER

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CONVENTIONAL LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

  1. Home
  2. Mortgage Knowledge Center
  3. Helpful Downsizing House Tips

MORTGAGE

Helpful Downsizing House Tips

EXPECTED READ TIME: 5 MINUTES

June 28, 2021

When you're looking at downsizing your house, there's a lot to consider — especially if you're changing your location and lifestyle. Downsizing from a large home to a smaller one can be a relief, even if your new house is just a bit smaller. Many people decide to downsize when they're close to retirement. Read on to discover the best tips to make this big change a success.

Benefits of Downsizing House

There are so many advantages of downsizing. Living smaller can mean:

  • Less maintenance
  • Lower insurance costs
  • Lower utility bills
  • Lower mortgage payments
  • Simpler living
  • Better social life

Downsizing also lets you create the way you want to live now. That can be quite different from when you were raising kids or working full time. Take advantage of downsizing to:

  • Create a new space to fit your needs
  • Get organized and enjoy uncluttered living
  • Live simpler and have more time for yourself
  • Get rid of stuff and make relocation easier

How to Start Downsizing

If you've lived in a home for over five years, you know how much can accumulate. But what about those homeowners who have lived in their house for decades — even their entire adult life? Now that can be quite a project, and the more help, the better. If you have family nearby, get their assistance. Then you can distribute what you won't be taking with you. If not, there are companies that specialize in helping people downsize. This can be a big project and it will be easier to tackle with more sets of hands.

Downsizing can mean you only take what you love. Depending on your timeline, it's never too early to start going through your home and sorting. We suggest these four piles:

  • Keep
  • Give away
  • Donate
  • Toss

Once you get closer to moving, then you'll need to be more strategic. Know where you're going and have the measurements of each room. There are several free programs online where you can draw a floorplan and lay your furniture out. That way, you won't be taking items that are too big for the space.

When it comes to the move, the more planning, and organization, the better. You don't want to end up with too much stuff. And on the other hand, you don't want to get rid of things you wished you'd kept. Besides measuring the rooms, check out the cabinet and storage space — especially in the kitchen. You may not be able to take four sets of china with you. In that case, decide what to keep and what to give to friends and family or possibly sell.

Downsizing From House to Condo

Many people deciding to retire are choosing to go from a house to a low-maintenance condo. Living in a condominium gives you more freedom to travel and leave your home without worrying about taking care of the yard. All you have to do is lock the door and leave.

As you're decluttering and sorting, box up and label anything you won't be using. That will make the process so much faster when the actual move comes. Consider renting a storage space to pack items away as you go. Keep the things you may need closer to the front of the unit.

With condo living, you won't have all that outside maintenance. So, paring down your garage should be at the top of your list. You won't need mowers or hedgers. But you will need a basic set of tools.

Living in a condominium community can give you access to more amenities and also a way to make new friends. Amenities can include a gym, café, pool, putting greens, and private parking. If you'd like to live in a larger city, consider mixed-use condos that include shopping and dining.

Downsizing From House to Townhouse

What about downsizing from a house to a townhouse? In that case — as with a condo — you might not be giving up square footage. Instead, you may even be gaining some. Townhomes come in all sizes and price points, from less expensive to luxury. Depending on your townhome, you may or may not be responsible for the outdoor maintenance.

The good thing about townhomes over condos is the private garages. Most new townhomes have large two-car garages that would be plenty big for a small workshop. In that case, you won't have to get rid of so much from your garage.

Make sure to review any homeowner association (HOA) rules and dues before making a commitment.

House Swap Downsize

More and more families are doing the house swap downsize. What is it? It's when the older parents have a larger home than the grown children. Rather than each selling their homes — they swap houses. The nice thing about this arrangement is it keeps the familial home in the family.

Keeping the furniture with the house is a great idea if you have heirlooms. You can still sell each other the properties and exchange money if needed. You'll most likely need the advice of an attorney and title company.

When should you downsize your house?

Retirement or pre-retirement is an excellent time to think about downsizing, especially if the maintenance of your current home is getting to be too much. Additionally, if you have substantial equity and can purchase a new smaller home with cash or have a large down payment, that could cut your housing costs quite a bit.

When your kids have moved out, and you just have too much house, that's another good time to consider a change. And you may be able to get something smaller and nicer than what you already have. If your home is dated, you'll enjoy looking at properties with open floor plans, modern kitchens built for entertaining, large master suites, and luxury bathrooms.

It's always good to check out all of your alternatives before you decide to downsize. You may be in for sticker shock if you haven't purchased a home for years. Plus, it depends on what you can get for your home. Talk to a trusted real estate agent to see what your options are. After your research, you may decide to stay where you are and age in place. If that's the case, consider what renovations may fit your needs.

Downsizing your home is a big project, and it's best to do it in stages. From home shopping to decluttering and packing — get ready for some fun and sore muscles! We hope you've enjoyed these tips and good luck in your new endeavors.

For more information about PenFed Mortgages:
 

PenFed Mortgage: 

800-970-7766

Get Started

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image

CONVENTIONAL LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

  • VA Loans
  • Conventional Loans
  • First Time Homebuyer
  • Home Equity
  • Homebuying 101
  • Checklists
  • Adjustable Rate Mortgages
  • PenFed Top 10
  • Refinance
  • Jumbo Loans
  • FHA
  • Videos

Mortgage Products

  • Mortgage Center
  • Refinancing
  • Home Equity

PenFed HELOC

Rates as Low as % APR* with flexible use of funds

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Disclosures

1Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.

*Prime Rate is % as of . The APR for this Home Equity Line of Credit (HELOC) is based on prime plus a margin and can change monthly. Fixed Rate Advances will be amortized over the Fixed Rate Advance Term, with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin, and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes.

  • Annual Fee: Notwithstanding the foregoing, an annual fee of $99 will be assessed on each account anniversary.
  • Home equity lines of credit (HELOC) are variable rate loans and the interest rate is subject to increase after consummation of the loan on monthly basis. Closing costs range between $500 and $8,500 for credit lines of $500,000. Contact a representative for additional details.

Appraisals: PenFed will attempt to establish value via an independent method. If that method is unsuccessful, or the value is not sufficient for the amount requested, an appraisal will be required regardless of CLTV. An appraisal is always required in the following circumstances:

For all loans with a loan amount greater than $400,000.

If an appraisal is required, it must be ordered by PenFed. You will be contacted for authorization and payment prior to ordering. Appraisal fees average $550 to $850 (some run higher).

  • Closing Cost Credit: PenFed will pay most closing costs associated with a home equity line of credit (HELOC), which includes credit report, flood certification, settlement/closing, property ownership and encumbrances search, recording, property search, and quick close. Member is responsible for any city, county, and/or state taxes if the subject property is located in FL, LA, MD, MN, NY, TN, or VA. If an appraisal is required, the member, who is responsible for the fee whether or not the loan closes, will pay the cost.

Interest may be tax deductible, consult a tax advisor for further information regarding the tax deductibility of interest and charges.

Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Draw Period. During your Draw Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.

Fixed Rate Advances will be amortized over the Fixed Rate Advance Term with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes and 4.75% for investment properties.

Property Insurance: Property insurance is required.

Multiple PenFed Loans: Multiple PenFed Equity loans and HELOCs are available as long as the member and collateral qualify (except Texas). For Equity loans and HELOCs the total indebtedness cannot exceed $500,000 for all PenFed Equity and HELOCs combined.

PenFed does not lend on:

  • Mobile homes
  • Co-ops or time-shares
  • Properties that are currently listed on the market for sale
  • Commercial property or property used for commercial purposes, even if a residence is part of the property
  • Undeveloped property (land only)
  • Properties with more than 4 units

Properties that are currently under major construction/renovations: Property must be fully livable, with no safety issues. (Examples: no missing rails from stairs/decks, no open walls with wires showing, missing kitchen appliances/counters, missing bath fixtures or unfinished pool).

  • Additional limitations may apply

Home Equity Line of Credit:

  • This Account has a Draw Period of 10 years, followed by a repayment period of 20 years.
  • If only minimum payments are made during the draw period, the loan balance will not decrease.
  • In Texas, the maximum CLTV available is 80% on owner occupied properties. Additional restrictions apply in Texas, so please ask a representative for details.
  • In all other states, the maximum CLTV is 85% on owner occupied properties and second homes. Additional restrictions or requirements may apply based on application characteristics.
  • Property type of Condo has a maximum CLTV of 80%.
  • The maximum CLTV available is dependent on credit qualification.
  • Rates vary depending on owner occupancy and CLTV and other loan criteria.

Minimum Loan Amount Requirements in all States:

  • For an owner occupied property or second home the minimum loan amount is $25,000 and the maximum amount is $500,000 with a CLTV of 85% or less of the fair market value.

Other terms and conditions apply; call 844-918-4307 to speak with a representative for details. All rates and offers are subject to change without notice. To receive advertised product, you must become a member of PenFed.

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This credit union is federally insured by the National Credit Union Administration. Rates are current as of September 2023 unless otherwise noted and are subject to change.

APY = Annual Percentage Yield
APR = Annual Percentage Rate


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You are leaving PenFed.org and entering a third party site. PenFed Realty, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Realty, LLC, see the Affiliate Business Arrangement Disclosure.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website.


The content you are about to view is produced by a third party website that is unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Title, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Title, LLC, see the Affiliate Business Arrangement Disclosure.


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