Should I downsize and move, or just stay put? This is one of the most common questions asked by retirees. Recently, there have been inquiries about whether downsizing or a reverse mortgage is the better option. Let's examine both choices in order.

First, let's check the market value. The average home value in Duluth is $447,344 according to Zillow. This is a 2.6 percent decrease from a year ago. Other reports indicate that the median sale price as of May is $489,000, and in the last 30 days, it has reached $549,000. This discrepancy is due to differences in timing and methodology. Regardless, Duluth is among the areas in Georgia with higher market values.

So, what happens if you downsize? Selling your home and moving to a smaller one can provide you with cash from the difference. However, there are costs associated with selling, moving expenses, and the emotional burden of leaving a familiar neighborhood. What about a reverse mortgage? If you are over 62 and the home is your primary residence, you can access your equity without moving. The most common product, HECM, is backed by the Federal Housing Administration. Funds can be received as a lump sum, monthly payments, or a line of credit. Repayment occurs when the home is sold, the owner passes away, or no longer resides there.

What about property taxes? This is a common concern. The average property tax rate in Gwinnett County is 0.98 percent. However, there can be significant variations within the county. In some areas, the median effective tax rate can rise to 1.26 percent, and in regions adjacent to Atlanta, it can reach 1.44 percent. Even after obtaining a reverse mortgage, the property taxes and insurance must still be paid by the owner. Failure to pay can lead to default risks. Therefore, the application process includes an assessment of financial capability to handle these costs.

How much will it cost? There are origination fees and initial mortgage insurance premiums. The upfront costs are generally higher than a standard mortgage. So, are there no advantages? There are. You can create cash flow without monthly repayments, and HECM is a non-recourse loan, meaning that if the home value falls below the loan balance, heirs are not required to pay the difference. However, over time, the equity left in the home decreases. This means that the assets passed on to children will also be smaller. Both downsizing and reverse mortgages have their pros and cons. The right answer varies for each household.

How is the loan limit determined? It depends on the home value, the applicant's age, and the interest rates at that time. Generally, the older you are and the higher the home value, the more you can borrow. The exact amount can only be determined after an individual assessment. What about credit scores? While not as strict as traditional loans, credit history is considered in the financial capability assessment to ensure that property taxes and insurance can still be paid.

So, when should you make a decision? There's no need to rush. The first step is to receive mandatory counseling from a HUD-approved agency. This counseling compares downsizing and reverse mortgages side by side and provides advice tailored to each household's asset structure. The counseling fee is minimal, but it is a necessary step before applying. In areas like Duluth, where there is high demand for Korean school districts, it may also be beneficial to consider what to do with the house after children finish their education. While school ratings can be referenced from sources like GreatSchools, keep in mind that boundaries change frequently, so it's wise to verify assigned schools before making a decision.

As of 2024, 15.8 percent of Georgia's population is over 65. In areas like Duluth, where there are many Korean families, more retirees are contemplating their options. If considering a reverse mortgage, it is essential to undergo mandatory counseling from a HUD-approved agency before applying. There are scams targeting the elderly. Be particularly cautious of those who rush you to sign contracts or offer free gifts as bait for counseling. It's not too late to decide after discussing thoroughly with your spouse and children. This article is not investment or legal advice. It is recommended to consult with professionals before entering into any contracts.