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According to recent research by realtor.comThe average mortgage payment has increased nearly 44% over the past four years, reaching $2,005 today. The report also cited that except for one week in late February 2026, interest rates have remained above 6% since September 2022. This means many potential sellers are left stranded.
As a retiree or someone who is nearing retirement, you may be debating what to do about your living situation, as you may be tempted to relocate to a warmer climate to lower living expenses.
Would it be better to move to a southern state after retirement than keep your current residence in a northern or colder state?
What is the real cost of going south?
According to Zillow, the average home price is $375,662 in Florida and $569,411 in new Jersey. If you have a paid-off home in New Jersey and you decide to sell it to buy a property in a warmer state like Florida for cash, it may feel like you’ll be left with a significant amount of money. However, you need to take into account closing costs and relocation expenses. The whole situation changes when you are carrying a mortgage.
Higher interest rates will increase your expenses
“The most important but least obvious expense in any Down South retirement move is the change in the mortgage rate environment, which retirees never take into account in their budgets,” said real estate expert and president Cody Schuiteboer. best interest financial.
Schuiteboer notes that his company recently assisted a couple move from Michigan to Sarasota, Florida. The difference in mortgage rates alone resulted in $168,000 in extra interest paid over a 20-year term. He cited that someone who secured a 3.25% or lower mortgage in 2021 and sells to buy a property with 6.75% rates today could see their monthly payments increase by $700 to $1,200. Although there are many variables at play here, if you have a mortgage, you could end up spending more on interest right now going south.
you will have new expenses
“Take your total monthly overall housing cost (mortgage, taxes, insurance and maintenance) today and compare it with the anticipated payment in a new location,” shares founder and managing partner Sean Malloy. Malloy Law Office.
He emphasized that if you have a mortgage or if you’re just focusing on home prices, you could be hit with insurance increases that could amount to thousands of dollars per year.
thoughts of going down south
Before you sell your home or make a decision about where you’ll live in retirement, you’ll want to consider the following expenses:
- Buying a second home.
- Mortgage rates now higher than the rate you locked in.
- Property tax in new location.
- Likely to spend money on renting before buying.
It may be cheaper to survive
Malloy commented, “For those who already have a low fixed mortgage or have purchased a home with no mortgage in a cold state, living there may be a more prudent financial choice.”
He emphasized that even if property taxes drop, insurance and HOA fees can still hurt your budget. You can use the calculator to compare the cost of living in different states.
Schuiteboer warned that high transaction costs alone could wipe out several years of projected savings. He explained that selling a home includes paying up to 10% in sales-related fees, such as agent commissions, closing credits, transfer taxes and title insurance.