Wednesday, November 24, 2021 / by Raj Jaggi
Is Downsizing a Good Option for You? Before You Make The Move, Ask Yourself These 5 Questions.
Many homeowners choose to downsize for a variety of reasons. Perhaps they'll retire soon, or perhaps their children have already flown the coop. The extra rooms are no longer required, and cleaning and keeping them can be costly. Perhaps they've reviewed their recent electricity bills and considered ways to save money on utilities. More individuals are interested in living more responsibly, and one way to do so is to live in a smaller, more manageable, and easier-to-maintain home.
Whatever your motivation, keep in mind that downsizing is a serious decision that necessitates thorough consideration of your circumstances and objectives. Here are five questions to ask yourself if you're thinking about making the switch. Hopefully, your responses will assist you in preparing for the next lifestyle and financial changes.
One of the most common motivations for downsizing is to save money. It's certainly one of the first things you looked into if you've really considered downsizing. When comparing how much you already pay for your home to how much you'll pay for a smaller home, don't forget to include in other expenses like property taxes, homeowners insurance, utilities, and even upkeep, repairs, and improvements. If you're downsizing to a townhouse or condo, you may also have to pay homeowners association costs.
You should think about these costs carefully because moving into a smaller home does not always imply that you will save money. While downsizing saves money on things like electricity and maintenance, it might also mean higher living costs depending on where you go. Not to mention the costs of relocating and furnishing your new residence. When deciding whether downsizing is a better alternative, those household costs might be a major and significant influence.
Another issue to consider is how much you'll be able to get for your home in today's market. Instead of underestimating the costs of selling a house, it's necessary to consider the big picture. There are costs such as the real estate agent's commission (unless you opt for a "For-Sale-By-Owner" or FSBO sale), real estate transfer taxes, loan payoffs, and home warranties, to name a few. You may also be forced to spend a significant amount of money on necessary repairs before listing your home, as well as expert home staging services if you need to attract more purchasers.
If you've owned your house for a long time, you've most likely built up a significant amount of equity. This means that selling your property could leave you with a comfortable nest egg to put toward a smaller, less expensive home while still leaving money to save and invest in the future. The problem arises if you sell your property and the proceeds are less than the amount you owe on your mortgage. You'll either have to use your own money to make up the gap or risk a short sale if this happens. In other words, if you have a negative equity position on your property, you may have to postpone your plans to downsize for the time being and stay there.
Whatever your motivation, keep in mind that downsizing is a serious decision that necessitates thorough consideration of your circumstances and objectives. Here are five questions to ask yourself if you're thinking about making the switch. Hopefully, your responses will assist you in preparing for the next lifestyle and financial changes.
One of the most common motivations for downsizing is to save money. It's certainly one of the first things you looked into if you've really considered downsizing. When comparing how much you already pay for your home to how much you'll pay for a smaller home, don't forget to include in other expenses like property taxes, homeowners insurance, utilities, and even upkeep, repairs, and improvements. If you're downsizing to a townhouse or condo, you may also have to pay homeowners association costs.
You should think about these costs carefully because moving into a smaller home does not always imply that you will save money. While downsizing saves money on things like electricity and maintenance, it might also mean higher living costs depending on where you go. Not to mention the costs of relocating and furnishing your new residence. When deciding whether downsizing is a better alternative, those household costs might be a major and significant influence.
Another issue to consider is how much you'll be able to get for your home in today's market. Instead of underestimating the costs of selling a house, it's necessary to consider the big picture. There are costs such as the real estate agent's commission (unless you opt for a "For-Sale-By-Owner" or FSBO sale), real estate transfer taxes, loan payoffs, and home warranties, to name a few. You may also be forced to spend a significant amount of money on necessary repairs before listing your home, as well as expert home staging services if you need to attract more purchasers.
If you've owned your house for a long time, you've most likely built up a significant amount of equity. This means that selling your property could leave you with a comfortable nest egg to put toward a smaller, less expensive home while still leaving money to save and invest in the future. The problem arises if you sell your property and the proceeds are less than the amount you owe on your mortgage. You'll either have to use your own money to make up the gap or risk a short sale if this happens. In other words, if you have a negative equity position on your property, you may have to postpone your plans to downsize for the time being and stay there.
It's critical to find out the ideal quantity of living space for your circumstances. If your existing house provides enough space for your career, hobbies, and family needs, as well as the fact that you can afford to stay and maintain it, downsizing may still be a long way off.
However, if you're starting a new chapter in your life where your children are older and have begun to move out, you may not need all of the extra bedrooms. Furthermore, heating and maintaining the additional rooms might be expensive.
Consider your outdoor space as well. If having a lush garden or creating a calm outdoor hideaway is essential to you, it may be difficult to give up. If you find that keeping your yard is too much labor, try relocating to a condo or a low-maintenance home. When moving, don't forget to consider additional factors like parking or garage space, especially if you have two automobiles.
When weighing the benefits and drawbacks of downsizing, keep in mind that having the right floor plan is crucial to getting the most out of your space. If you think moving is the right choice for you, there are many smaller houses with a substantially better floor layout that could be the key to your happiness.
When you downsize, you'll have to cope with less stuff because you'll have less space. This entails downsizing your belongings and only bringing what you require rather than maintaining everything you enjoy. And, because parting with your belongings can be an emotional experience, you should think about how attached you are to them and whether you can part with many of the things you've gathered and loved over the years.
Begin by considering all of your belongings. If you insist on keeping the majority of stuff, you might want to consider moving later. Alternatively, you can rent storage space until you can figure out what items you want to keep, donate, or sell. If you believe that sorting through your possessions is a nightmare, certain businesses can assist you. However, if sifting through your old belongings seems liberating and you'd like to get rid of the many items you're holding onto for no reason, be prepared to make a plan so you can correctly figure out what you can and can't take with you to your new house.
When you downsize, you'll have to cope with less stuff because you'll have less space. This entails downsizing your belongings and only bringing what you require rather than maintaining everything you enjoy. And, because parting with your belongings can be an emotional experience, you should think about how attached you are to them and whether you can part with many of the things you've gathered and loved over the years.
Begin by considering all of your belongings. If you insist on keeping the majority of stuff, you might want to consider moving later. Alternatively, you can rent storage space until you can figure out what items you want to keep, donate, or sell. If you believe that sorting through your possessions is a nightmare, certain businesses can assist you. However, if sifting through your old belongings seems liberating and you'd like to get rid of the many items you're holding onto for no reason, be prepared to make a plan so you can correctly figure out what you can and can't take with you to your new house.
When it comes to downsizing, there are no hard and fast rules. What may be appropriate for you may not be appropriate for others, so you must first examine yourself and your position before proceeding.
Begin by considering your emotions. Are you prepared to downsize your home? What are some of the things you're excited about? If the prospect of downsizing excites you since you'll have more time to sit on the patio with a favorite book or drink instead of cleaning bedrooms you don't use or maintaining your outside area, you're probably ready to do so.
While there are obvious benefits to moving into a smaller house, you won't realize how little it is until you start looking, and you may find yourself comparing your potential home to what you've grown accustomed to. This is why it's also a good idea to prepare a list of advantages and disadvantages and to consider your family's requirements and future goals before making a decision.
Conclusion
This is a difficult shift, so don't forget that it's normal to feel emotionally drained. After all, you're relocating from a home you've constructed over time to a new, smaller home where you'll need to make adjustments to everything. Just keep in mind that your goal is to simplify your life and possibly save money for more important things in the future.
