Should I Downsize My Home?
When we think about buying a new home, we traditionally think about “buying up” — in other words, a larger and/or more expensive home. For example, a young couple just starting out in life may buy a starter home. But once they start having children that starter home becomes too small, and it’s time for a larger home with more bedrooms and bathrooms.
But sometimes, it makes sense to think the exact opposite. You have too much home and want to live in a space that’s more manageable and/or affordable. Here are some signs that this might apply to you:
· Do you have more rooms than you need? If you have one or more rooms that you seldom use, it might be a sign that you’re ready for a smaller home. “Empty nesters” often find themselves in this situation: once the children have grown up and moved on, there just isn’t a need for so much space anymore.
Think about the needless cost as well. Rooms that are just collecting dust cost you every day, including property taxes, utility bills and general maintenance. If you move to a smaller home that’s just the right size, you’ll likely save a lot of money.
· Is it just too much to care for? Big homes require a big investment of your time (not to mention your money). Regardless of what stage of life you’re in, you don’t want to feel swamped with cleaning and maintaining your home — or taking care of a big yard. Paying others to do some or all of the work just adds to your monthly budget. If you don’t feel it’s worth it — then maybe it’s time to downsize.
· Do you want to move closer to your children and grandchildren? You raised your family in your home. But now your children have moved on and may have families of their own. If they’ve moved to another town, would you like to be down the street?
· Are you retired — or about to be? Many retirees downsize their homes to simplify their lives and save money. It can be a smart way to make your retirement savings and any income stretch further. A smaller and/or less expensive home can save you on mortgage payments, insurance and property taxes.
In fact, many retirees trade in their larger homes in the suburbs for condos or lofts downtown. Not only do these people have fewer hassles with maintenance, but they’re also within walking distance to fun things to do, including cultural centers, nightlife and restaurants.
· Ready to reduce your debt? Less expensive homes mean smaller mortgages and mortgage payments. That might free up more cash to help you pay off higher interest debt, such as credit cards.
· Time to cash out? If you’ve owned your home for several years, you may have accumulated a substantial amount of home equity. By downsizing, you’ll be unlocking that equity — which you can then use however you see fit (including buying a smaller and less expensive home, perhaps with some cash left over).
· Would you like more freedom? For some people, simpler is better. By downsizing to a smaller home, you’ll have less to manage. And very likely, you’ll be freeing up cash that you can use for other purposes. Imagine having more time and money to travel, invest in a new hobby—whatever you see fit.