Downsizing for the Win: How Homeowners Benefit from Smaller Spaces
Downsizing has long been a popular option when homeowners reach retirement age. But there are plenty of other life changes that could make downsizing worthwhile. Homeowners who have experienced a change in their lives or no longer feel like their house fits their needs may benefit from downsizing too. U.S. News explains:
“Downsizing is somewhat common among older people and retirees who no longer have children living at home. But these days, younger people are also looking to downsize to save money on housing . . .”
And when inflation has made most things significantly more expensive, saving money where you can has a lot of appeal. So, if you’re thinking about ways to budget differently, it could be worthwhile to take your home into consideration.
When you think about cutting down on your spending, odds are you think of frequent purchases, like groceries and other goods. But when you downsize your house, you often end up downsizing the bills that come with it, like your mortgage payment, energy costs, and maintenance requirements. Realtor.com shares:
“A smaller home typically means lower bills and less upkeep. Then there’s the potential windfall that comes from selling your larger home and buying something smaller.”
Indeed, as a homeowner, the equity you've built up in your home can be a valuable asset that can provide financial flexibility and assist you in purchasing a home that better meets your current needs. Equity is the difference between the market value of your home and the remaining balance on your mortgage.
When you're ready to sell your house, working with a team of real estate experts, including a trusted real estate agent, can be immensely beneficial. They will assist you in determining the appropriate listing price for your home based on its market value, local market conditions, and comparable sales. Setting the right price is crucial to attracting potential buyers and maximizing your selling potential.
Additionally, your real estate team can help you navigate the process of finding a new home that aligns with your current needs and preferences. They will guide you in identifying the best location, size, and features for your next home, taking into account your budget and the current mortgage rates.
Understanding your financial capabilities at today's mortgage rates is an essential aspect of the homebuying process. Your real estate team can connect you with mortgage professionals who will assess your financial situation, including your income, credit history, and down payment savings, to help you determine what you can afford in the current market.
By leveraging the expertise of real estate professionals, you can make informed decisions throughout the selling and buying process, ensuring that you get the most out of your home equity and find a new home that meets your evolving needs.
What This Means for You
If you’re thinking about downsizing, ask yourself these questions:
- Do the original reasons I bought my current house still stand, or have my needs changed since then?
- Do I really need and want the space I have right now, or could somewhere smaller be a better fit?
- What are my housing expenses right now, and how much do I want to try to save by downsizing?
Once you know the answers to these questions, meet with a real estate advisor to get an answer to this one: What are my options in the market right now? A local housing market professional can walk you through how much equity you have in your house and how it positions you to win when you downsize.
If you’re looking to save money, downsizing your home could be a great help toward your goal. Let’s connect to talk about your goals in the housing market this year.