The Rise of Mortgage-Free Living: What It Means for Downsizers

If you’ve been thinking about downsizing to lower your expenses, be closer to family, or just make life easier, here's a trend worth paying attention to:

More homeowners are buying their next house outright, without taking on a new mortgage. And if you’ve owned your home for a while, you may be able to do the same. No mortgage. No monthly housing payments.

A Record Share of Homeowners Are Mortgage-Free

According to analysis from ResiClub of Census data, more than 40% of U.S. owner-occupied homes are mortgage-free, an all-time high for this data series. That means 4 in 10 homeowners own their homes free and clear (see graph below):

One big reason for this trend? Demographics. As Baby Boomers age and stay in their homes longer, many have had the time to fully pay off their mortgages. You might be in that group too and not even realize just how much buying power you now have.

How Downsizers Are Turning Equity into Buying Power

As a homeowner, your equity is your biggest advantage in today’s market. If you’re mortgage-free (or close to it), it could give you the power to buy your next home in cash. That means you’d still have no mortgage payment in retirement, plus:

Less financial stress as you age
More cash flow if you purchase a less expensive home
A faster, simpler transaction with fewer financing hurdles

Here’s how it works: you’d sell your current house and use the proceeds to buy your next house in cash. While that may sound like something out of reach, it’s more realistic than you may think. In fact, a recent survey from John Burns Research and Consulting (JBREC) and Keeping Current Matters (KCM) shows all-cash purchases are climbing across the country (see graph below):

For Baby Boomers especially, buying in cash offers more control over your next chapter. You could buy a smaller, easier-to-maintain home and free up time and money to focus on what matters most, all while staying debt-free.

Because downsizing isn’t about downgrading; it’s about upgrading your quality of life.

Financial Tips to Consider Before Downsizing

Know the Value of Your Current Home

Your home is likely your biggest financial asset. Before making any decisions, take time to understand how much equity you’ve built up. A professional valuation or a free home value estimate can give you a clearer picture of your true buying power.

Plan for Ongoing Expenses

Even if you purchase your next home in cash, you’ll still need to budget for property taxes, insurance, utilities, and upkeep. Downsizing can help reduce many of these costs, but it’s important to factor them into your long-term financial plan.

Align Your Move with Your Lifestyle

Downsizing is about more than just saving money. It’s a chance to reshape your lifestyle. Maybe you want to be closer to family, enjoy a smaller space with less upkeep, or free up funds for travel and hobbies. Think about what matters most to you and let that guide your decision.

Decide if Cash is the Right Move

Buying in cash can feel liberating, but it’s not the only option. Some homeowners choose to keep a small mortgage for added flexibility or potential tax benefits. The best choice depends on your financial goals, and having a plan in place can help you feel confident either way.

How Luminate Bank Can Help

Your downsizing journey doesn’t have to feel overwhelming. At Luminate Bank, we’re here to help you turn your home equity into a strategy that works for your life today and in the years to come.

Unlock Your Equity with Confidence: We’ll help you understand your home’s current market value and how much buying power you truly have. With expert insight, you can see clearly what your next step could look like.
Get Tailored Mortgage Guidance: Not sure if you should buy in cash or keep a small mortgage? Our experienced team will walk you through the pros and cons of both options so you can make a decision that supports your lifestyle and retirement goals.
Simplify the Transition: Moving can be stressful, but your financing doesn’t have to be. From planning your sale to structuring your next purchase, we’ll guide you through the process so your downsizing journey feels straightforward and stress-free.
Put Your Money to Work: If your move frees up cash, we’ll connect you with flexible banking tools to keep your money accessible and working toward your long-term plans. That might mean saving for retirement, investing, or simply keeping your day-to-day finances streamlined.

Bottom Line

You’ve worked hard for your home. Now it’s time for it to work hard for you. Downsizing can unlock freedom, flexibility, and peace of mind, without the burden of debt.

Let’s talk about what your house is worth, what’s possible in today’s market, and how Luminate Bank can help you take your next step with confidence.

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