Wondering If It’s Time To Downsize? Take These Questions Into Consideration First.
Whether your children are going off to college, your utility payments, mortgage, and upkeep have become unmanageable, or you want to boost your nest egg, there are countless of reasons to consider trading square footage in for a cozier living space. But before signing into a new mortgage or down payment, be sure to consider both the pros and cons of downsizing to guarantee it’s the best choice for your lifestyle and future.
How Much Does Size And Space Really Matter To You?
Decide how much of your identity reflects on your home. For many of us, more than any other possession, our home is used as a barometer of our status in the community. This leads to the notion that “bigger is better” and “small is worse”. Before downsizing, it’s important to confront those notions and explore how it may or may not affect your decision.
Will You Miss Certain Aspects Of Having A More Spacious Home?
Think about daily routines and activities you do in your home. Do any of these activities require space? Decide how you use your extra space such as a home office, gym, guestroom, or multiple restrooms. Are these amenities something you could live without? Think about how often you entertain guests, and if downsizing will affect that part of your lifestyle.
Is Cost Important To You?
It’s no secret that downsizing saves time and money. You will have less to clean, less to heat, and overall less energy usage. Many people decide to downsize for financial reasons whether it be to boost your nest egg or have lower monthly payments. Reducing the cost of living will free up extra cash for you to either invest or to improve your lifestyle. For example, selling a $300,000 home with the mortgage paid off for a less expensive $150,000 home, you will have an extra $100,000 in your pocket, minus transaction costs.
Don’t Forget About Taxes
A smaller home means smaller property taxes. Depending on the amount you decide to downsize, you can save thousands of dollars in property taxes alone. If you currently live in a more urban area, try to explore further out from the city to compare how far your budget will take you in a less in-demand area.
Downsizing Your Furniture
Calculate the cost of buying new furniture that will fit in a smaller space. A large sectional in your current home may not be ideal for your new home. Consider bedroom furniture and closet space. Will a smaller home have enough storage space for your belongings? Will you be able to sell or give away precious antiques or family heirlooms that are too bulky to store in a new home?
How Much Will You Get For Your Current Home?
Will the sale price of your home be enough to cover the costs of moving, purchasing a new home, and moving costs? If you’re downsizing because you want extra cash to invest in your future, calculate realistic savings once you’ve settled in your new home. Remember to set extra money aside in case you run into unexpected construction or maintenance in your new home. Hire a Realtor to help you negotiate sale and list pricing to ensure you will get the most bang for your buck.
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