We’re huge fans of downsizing because it was right for us and our goals.
Downsizing to a small house made it possible for us to save time and money.
Downsizing to a small house made it possible for us to achieve debt freedom crazy fast.
Downsizing to a small house made it possible for us to start investing for financial independence/early retirement.
Downsizing to a small house might not be right for everyone; however, downsizing does work for lots of people for a lot of reasons. Moving into a smaller house might be right for you if:
- you’re getting ready for retirement, early or otherwise;
- you’re looking for an easier-to-maintain home;
- you’re trying to save money and eliminate debt faster.
Downsizing to a smaller house doesn’t have to involve debt. You might consider:
- your timeline and how much longer you plan to live in your current home;
- your cashflow and how much money you have in savings you could use to pay cash for a new home; or
- the equity you have in your home compared to current market value.
To downsize to our “tiny” 500 sqft house, we did take on a mortgage, but that’s because we were impatient, we didn’t have any cash in savings, and we didn’t spend time researching our options beyond taking on a conventional mortgage. Lessons learned.
Not long after we became debt free and mortgage free, we discovered Unison.
Unison has a “Home Owner” program for those who have equity in their homes they want to use. Unison “invests” in your home by giving you a portion of your home’s equity, which you could use for a financial goal like downsizing your home. Unison gets paid back when you sell the first home, the one they’ve “invested” in. Unison is not a HELOC or a second mortgage. Unison is an “investor” and shares in the gains and the losses of your home, just like home owners are subject to.
For those who qualify, Unison can help you get up to 20% of your home’s current market value. So, in some areas, this could be enough money to help you downsize.
Here’s an example of the program in action.
Let’s say your kids have moved out of your big house in a Philadelphia, PA suburb and you want to move into a small house in the Poconos. Let’s say your big house in the ‘burbs is currently worth $500,000. If you qualify for Unison’s “Home Owner” program, you might be able to access $100,000 of your big home’s value, which is plenty of money to buy a nice bungalow in the mountains and have some money for remodeling. When you sell your big house in Philly, you pay Unison.
For those who bought “low” and stayed in their homes long enough to see significant market improvements, this program might be an option to access equity without have to take on debt.
If you want to downsize and live mortgage free, leveraging your current home by way of this Unison program might be helpful. You can access your home’s equity, purchase your new small house, and fix it up on the weekends while you’re working toward retirement (or whatever the next step is in your life).
Planning ahead is necessary if you think the Unison program might work for you because Unison requires that you keep your original home for at least three years after they invest in your house. That’s why this program probably works best for those who are preparing for an empty nest or retirement or some other kind of life change that could involve moving.
You can use this link to check to see if you qualify for Unison’s program — it takes just 60 seconds to complete the pre-qualification application.