Most homeowners will reach a point in time when they begin asking themselves if now is time to downsize, or move to a smaller home. There are a number of different reasons that cause homeowners to ask this question.
Maybe their kids have grown and moved on to their own homes and the homeowner no longer needs the additional space and rooms, or, they are getting ready to retire and their lifestyle and home needs have changed.
There are also financial considerations, where the household expenses of a smaller home can be significantly less. This presents the homeowner with a unique opportunity to utilize their savings in housing costs to pay for items like travel or other entertainment that couldn’t be afforded previously.
Don’t forget about the equity that’s been built up in the home. This also presents an opportunity to use the additional equity for investments, to pay down bills, or fund some other purchase.
Regardless of reasons for considering to downsize, it’s a big decision that shouldn’t be taken lightly. A careful reflection of your current, and future, lifestyle, home needs, financial situation, and more should be reviewed before making a decision.
Below are some of the factors to consider….
One of the most common reasons homeowners consider downsizing is the opportunity to reduce expenses. Don’t forget, it’s more than just potentially smaller mortgage payments that need to be considered. A smaller home typically means lower property taxes, utility bills, homeowner’s insurance, maintenance expenses, cleaning costs, and repair and upgrade costs.
A careful analysis of your current and future financial situation and goals, the amount of equity you may be able to free up, and the potential savings associated with downsizing your home, should be one of your first considerations.
Note: If you’re planning to move to a condo, coop, or townhouse, don’t forget to add in any HOA fees to your comparison.
The second major item to think about when considering to downsize your home is lifestyle. There are several components to this, and we’ll take a look at each.
This exercise will also help you determine what type of home you should look for if you do decide to downsize.
Inside the Home
Start by paying attention to how you use your home and the space it affords you. Are there rooms that are rarely used and have become unneeded or unnecessary, or are you still utilizing most of the space in your house?
Outside the Home
Similar to the above, pay attention to how you use the exterior of your home. How much yard do you currently need or want? Does mowing and landscaping a smaller yard save you time and money? Do you enjoy gardening and want to make sure you have the space in a future home?
This is an important, but often overlooked, aspect of downsizing a home. You should think about how you currently use your home to entertain family and friends. Do you have large get-togethers and barbeques, or are they typically smaller gatherings that can be accommodated in a smaller space?
Don’t forget to think about what you might be able to do with the extra time, cash and equity that downsizing may give you. Are there vacations, or trips, that you always wanted to take but didn’t have the time or funds? Are there hobbies that you want to start or get more involved in?
A house is a home and homes create memories. If you’re considering downsizing, you’ve likely lived in your home for a number of years and created many great memories in it. Feeling a bit overwhelmed emotionally is normal when considering a move, regardless of the reason you’re moving.
When thinking this through, keep in mind, your new home will create additional great memories that you can add to your list. There may even be new and different memories from the trips, travel, hobbies that you never had a chance to do before.
As you can see, making a decision to downsize involves more than just financial considerations. It’s a very personal decision, and only you can assess your current and longer term goals, needs, and aspirations. Take the time to think through what was mentioned above, in addition to any other priorities you may have. I’m confident that after careful thought, you’ll know very clearly whether it’s time to downsize now, or if that should be pushed to some time in the future.