The McMansion trend is waning: these days, 60 percent of people who live in homes greater than 2,000 square feet say if they started over again, they’d pick a smaller house. Trends aside, there are many reasons to consider downsizing. Here’s when it makes sense to consider downsizing the family home.
1. Save Money
Most people who downsize the family home save money on several fronts. A larger house costs more to heat, cool, and furnish. Taxes are based on home size, so bigger homes have a higher tax footprint. The larger the house, the greater the potential for things to go wrong, which means higher maintenance costs.
Often, people who buy those large homes find out after they move that they don’t really need all that space. Ask yourself if you’d rather spend discretionary income on furnishing that fifth bedroom in the house you bought or on a hobby or family vacation.
2. Live Within Your Means
Downsizing offers an opportunity to live within your means. This may be attractive if you are house poor, which means you bought more house than you could afford, and now you’re stretched at monthly mortgage bills, or if life changes have affected your income.
Refinancing could be an option, but that pushes the can down the road because you’re still paying taxes, utilities, and maintenance fees. Downsizing can get you out from under a too-high mortgage. By selling a large house, you can start over in an area that offers a cheaper cost of living.
3. Pay Off Debts
Debtors often prioritize mortgage payments out of fear of foreclosure. If you’ve fallen behind on payments or are in debt, it might be better for your finances to sell the home and start fresh. You can wipe out your debt with earned income, then move to a smaller place where your monthly expenses are reduced.
As you downsize your family home, you’ll come across items you no longer want or need, or that won’t fit in your smaller house. You can sell these items and put the proceeds toward debt repayment.
4. Retirement Planning
Getting closer to retirement, many people decide they want to pay off the mortgage to lower their monthly expenses. Selling a big home means paying off your mortgage and having capital to live on. Depending on your home’s sales price, you may be able to buy a smaller home or condo outright or get a smaller mortgage, where you’re able to save more for the future.
5. Personal or Lifestyle Changes
As you age, your preferences change. Something that was important to you might become less so. If you’re hanging on to a large house in a district with good schools, but your children are grown, it might make sense to relocate.
Aging often means a reduction in your inclination or ability to take care of a large estate. What would you rather do in retirement: keep up with the lawn and gardens or play golf?
Family is a motivation for downsizing. You might want to move closer to adult children to help care for grandchildren or downsize after the nest is empty. Estate planning can be a motivator, as large homes tend to cause issues with inheritance, especially if your adult children don’t want the family home.
Downsizing is a major financial and life decisions, so don’t rush into it. If you’ve given the topic some thought and want to downsize, HomeGo is here to provide you with a better home selling experience. With HomeGo, you can sell your home as-is, allowing you to reduce stress, avoid paying for repairs and sell your home quickly.