Downsizing your home can be a great way to make big profits while reducing your costs. Whether you still have a mortgage or not, selling your current home and buying a smaller one could be your ticket to financial success. Today, demand for homes is high due to low mortgage rates and low inventory. However, mortgage rates have risen by more than 2.5 percentage points since the beginning of the year, making financing a home purchase significantly more expensive. The National Housing Authority recommends that you should not spend more than 30% of your monthly income on housing.
Baby Boomers and the Silent Generation are the two groups most likely to buy a home close to family and friends. For most homeowners, equity is one of the most valuable assets, but sometimes it can be too expensive to maintain. If you plan on relying on home equity for income during retirement years, such as using a reverse mortgage, now may be the right time to downsize. Property taxes and maintenance costs may even be higher. Work with a real estate agent so you can sell your current home for as much money as possible.
Reducing the size of your home has many advantages. First of all, if you've been in your current home for a while, it's likely that its value has increased and that you're close to paying off your mortgage, if you haven't paid it in full. Buying a smaller, cheaper property will give you a lot of leftover capital to use for whatever you want. It also means that you can buy your new home as a cash buyer, giving you more options, a faster chain and the ability to live without mortgages. Reducing to a smaller home means less maintenance, lower bills and more time to do the things you love - it's an exercise in saving money and time. If you're going to downsize in the future, it means you can choose a property that better meets your needs as you age.
Rather than having to deal with stairs, limited accessibility or a huge garden that requires maintenance, you can choose a property that works for you. It's safe to say that homeowners don't usually daydream about buying a smaller home - but minimal maintenance is definitely an advantage of not living in a big way. After all, the time and money you used to spend on cleaning and maintenance can now be spent on fun things - that's why some people see downsizing as a step forward, not a step backwards. If you think there's less space, you're not alone - maybe you just want to simplify your life and eliminate the time and effort involved in maintaining a large home. So how would you like to spend your time? Maybe it's joining a gym, taking painting classes or taking some college courses. If you're downsizing due to a divorce or change in financial circumstances, it can be frustrating to have to deal with a smaller space than you're used to. On the one hand, downsizing could mean cutting your monthly mortgage payments, property tax bills and maintenance costs.
On the other hand, reducing staff could mean having to make concessions such as adapting to a smaller living space and also - depending on the circumstances - having to move to a new neighborhood. If you've lived in your current home for countless years, you've probably opted for a neighborhood that would fit your lifestyle at the time. If the value of your home has appreciated, right now may be the perfect time to take advantage of that value - especially since it's a seller's market according to Helen Guajardo, real estate expert at KW San Antonio.If you've reached a stage where you're feeling overwhelmed or just think you could use your time or money better, it's time to go smaller. Karen Scott (55) echoes this sentiment and says that moving to a smaller house can be “incredibly liberating”.With home prices rising by 19% in the last year alone, downsizing is no longer as affordable or cost-effective as it once was. The time may come when climbing the stairs of your two-story house several times a day can be too much - so if you've decided that now is the right time to downsize, it's important to consider several factors when choosing between housing options. One of the main reasons older people decide to downsize is to get rid of the burden of maintenance.