Five Things to Consider BEFORE You Downsize Your Home

Dated: August 12 2022

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Several factors influence why many homeowners decide to downsize. They might be about to retire, or their children may have moved out already. A smaller, more manageable home is one way to live more thoughtfully, something more people are becoming passionate about.

 

Whatever your motivation, keep in mind that downsizing is a significant decision that requires consideration of your current and future life needs. Here are five points to consider if you think downsizing may be the best option for you and your family.

 

1) Is it financially worth it? 

One of the most common motives for downsizing is to save money. If you've considered downsizing, it was probably one of the first things you researched. Don't forget to include the regular costs outside of mortgage payments when comparing how much you presently pay for your home to how much you'll pay for a smaller one, such as property taxes, homeowners insurance, utilities, and even upkeep, repairs, and improvements. If you're downsizing to a townhouse or condo, you might also have to pay homeowners association costs.

 

Because downsizing doesn't always result in cost savings, you should thoroughly examine these expenses. Although downsizing often results in lower maintenance and utility bills, the location of your new home may result in more significant living expenses. Not to mention the extra costs associated with relocating and furnishing your new house. These living expenses can help determine whether downsizing is wiser.

 

2) What about my excess stuff? 

When you downsize, you'll need to deal with less stuff because you'll have less space. This involves reducing your belongings and only bringing what you need, rather than retaining everything you own because you enjoy it. You might want to think about how emotionally tied you are to your belongings and whether you can part with many of the things you've gathered and cherished over the years, as letting go of your stuff can be difficult.

 

You might consider moving later if you want to keep most of it. You could rent storage space or give away or sell. Some businesses can assist you if you believe going through your possessions could be a nightmare. Be prepared to devise a strategy so you can effectively choose what you can and cannot take with you to your new house.

 

3) How much space do I really need? 

It's essential to determine the ideal amount of living space for your needs is critical. Downsizing may still be a long-term goal for you if your existing home has all the room you need for your family's needs, your work, and your interests, plus you have the money to stay and maintain it.

 

However, you might not need all the spare rooms if, for instance, you're starting a new chapter of your life and your children have already grown up and chosen to move out. Additionally, heating and maintaining the additional rooms might be expensive. Don't forget a garage or parking space if you have two automobiles.

 

When weighing the benefits and drawbacks of downsizing, remember that maximizing space requires a suitable floor plan. If you believe moving is the best option for you, many smaller homes with a substantially better floor plan could be the secret to your happiness.

 

4) Should I sell my current home? 

How much you will be able to get for your property in today's market is another factor to be considered. Instead of neglecting the expenses of selling a house, it's necessary to consider the entire state of your finances. A real estate agent's commission, real estate transfer taxes, loan payoffs, home warranties, and other costs are among them (unless you choose "For-Sale-By-Owner" or FSBO). Before listing your house for sale, you might also need to spend a sizeable amount of money on repairs that are required and on expert home staging services if you want to draw in more purchasers.

 

If you've owned your house for a long time, you most likely have considerable home equity. This implies that if you sell your home, you may receive a comfortable nest egg that you may use to purchase a smaller, less expensive house while also having some money left over for savings and other investments. The challenging situation is when you sell the home, and the proceeds are less than what you still owe on the mortgage. You will either have to utilize your own money to make up the gap at that point or risk a short sale. In other words, you might have to postpone your intentions to downsize for the time being and stay in your current property if you have a negative equity position towards your home.

 

5) Why do I really want to downsize? 

When it comes to downsizing, there is no absolute truth for every person. Before moving, you must evaluate yourself and your situation because what may apply to you may not be appropriate for others.

 

Start by taking your emotions into account. You may want to downsize. What are the things you are anticipating? You may be ready to downsize if the idea of moving into a smaller home excites you since you'll have more time to relax on the patio with your favorite book or drink rather than cleaning bedrooms you hardly ever use or maintaining your outdoor space. Even while downsizing has apparent benefits,  you might compare new homes to what you've come to expect in your current home. This is why, before deciding, it's helpful to establish a list of upsides and downsides and to consider your family's needs and future aspirations in greater depth before making any significant decision.

 

Remind yourself that it's acceptable to feel overwhelmed by emotions because this transition is by no means simple. Remember that your goal is to simplify your life so that you can hopefully enjoy other, more important things in the future.

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Team Yannett

Since he was 16 years old when his father explained to him how real estate worked with mortgages and leverage, Ed was hooked! Real Estate owners 40X more net-worth! His energy, enthusiasm, and te....

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