You might be thinking of downsizing. Maybe your kids have moved out or you're tired of going up and down stairs all day. Or you don't want to do yard work anymore. Whatever the reason, if you're on the fence about downsizing, here are some questions to ask yourself.
1. WILL IT MAKE MORE FINANCIAL SENSE TO DOWNSIZE?
To save money is one of the top reasons why people downsize. If you've given serious thought to downsizing, it’s probably one of the things you first looked into. When you are comparing how much you currently pay for your house vs how much you’ll pay for a smaller home, don’t forget to add the usual costs aside from mortgages, such as property taxes, homeowners insurance. If you don't have a mortgage some fees that might affect your decision is utilities, maintenance, repairs, and upgrades. Don't forget about annual HOA fees or even monthly homeowners association fees if you’re downsizing to a townhouse, condo, or villa. Moving into a smaller home doesn’t automatically mean you’ll be saving money. While expenses like utilities and maintenance are relatively cheaper when you downsize, you can also potentially have higher costs of living depending on where you will relocate. Not to mention the additional costs of moving and furnishing your new home. Those household costs can be a huge and significant factor when considering whether downsizing is a better option.
2. CAN I AFFORD TO SELL MY CURRENT HOUSE?
Another thing to think about is the current housing market and what the costs are associated with selling your home? Some costs of selling a house include the real estate agent’s commission, real estate taxes, loan payoffs, home warranty, HOA transfer fee, and title company fees. You might also have fees for negotiated repairs during the inspection period of the sale. Depending on how long you have been in your home, you may have a lot of equity in your home. However, things like market changes, refinances, and a home equity line of credit could mean you owe more than they current market shows your home is worth. This would mean you would be bringing money to close to make up the difference for what you make on the sale of your home and what you owe on your home. This scenario could change your affordability.
3. HOW MUCH HOME DO I NEED?
It can be hard to picture yourself living in a smaller home after years of being in your current home. However, life changes such as kids moving out and retirement, might make your current home more than you need. Think about what rooms you use on a daily/regular basis. When's the last time you went upstairs or in the extra bedrooms? Do you need a finished lower level? Just remember that the house you move to is the house you're going to have to clean and maintain. You'll want to think about the outdoor space as well. How much yard do you want? Do you enjoy gardening or do you want a smaller, more manageable yard? When thinking about the pros and cons of downsizing, also note that an optimal floor plan is critical to maximizing space. There are many smaller houses with a significantly better floor plan, which could be the key to your happiness if you think moving is the right choice for you.
4. WHAT WILL I DO WITH ALL MY STUFF?
This can be a big question for some people. If you've been in the same home for 20+ years, chances are you've accumulated a lot of stuff. What will you do with the extra things that won't fit in a smaller home? Letting go of the items that have stories and memories attached to them can be an emotional ordeal. For that reason this process might take longer than you think. You may consider going through and putting a post-it on the things you are comfortable letting go of. Get rid of those items and then go through your home and do that once more. This will go in stages and can help make the purging process more manageable. However, if you are okay with a big purge, consider hiring a professional to do an estate sale. Hold on to the items you're unsure about and when you find your next home you can measure the space and see what will fit and what needs to go. When in doubt, a good rule of thumb is if you haven't touched it in a year then you can get rid of it.
If you're still on the fence about downsizing, or you're ready to talk with a Realtor, reach out and let's talk about your future!