When you think of downsizing, you may picture homeowners at retirement age, looking for a smaller place to live after becoming empty nesters. This is one category of people who would benefit from downsizing, but there are actually many people who could benefit from downsizing.
Selling your home and moving into a smaller one can benefit you in multiple ways, and help you win in the current real estate market. Keep reading to learn more about how downsizing can be the perfect strategy to offset higher interest rates and competitive real estate market.
Take Advantage of Your Equity
Most American homeowners right now have a substantial amount of home equity thanks to significant and rapid growth in the real state market in the past few years. Downsizing can be a great way to continue enjoying the financial benefits of homeownership while taking advantage of home equity.
Greg Dallaire, Oshkosh Realtor says, “while it’s true that many homeowners would have to accept a higher mortgage interest rate if they choose to move, the monthly mortgage payment may still make save you money. If you are considering downsizing, talk to a few lenders about your options. You may find that you can sell your current home, use a portion of the equity to offset the increased interest rate when buying a smaller property, and still have a portion of the equity in cash to use toward other financial goals.”
Lower Your Housing Costs to Fund Your Other Goals
Of course one of the top reasons to downsize is to save money. A lower monthly housing cost, including decreased property taxes and utilities, means opening up other opportunities. While downsizing to save money is popular as a retirement strategy, there are plenty of other scenarios where this may make sense:
- Allowing one parent to quit their job to stay home with the kids
- Freeing up more monthly income to start a small business
- Adjusting your personal finances to pursue other goals, like investing in retirement, saving for college funds, or getting out of debt
Embrace a Lower Maintenance Home
Smaller homes often represent less maintenance. While this is not always the case, you can prioritize looking for a home that will require less upkeep while house hunting in your downsizing journey.
In nearly every downsizing process, you will find that the smaller home takes less time to maintain simply because it is smaller. A smaller home can be cleaned more quickly, maintenance and renovation will be less costly and time consuming, and the property will likely also require less from you. This is particularly true if you choose to downsize into a condo or a home with an HOA-managed exterior.
Reassess What You Need in a Home
As you enter different seasons of life, sometimes you find that the home you are in no longer meets your needs. In some cases, you may discover that your home is larger than you need it to be and adds extra stress to your life. When it comes to your home, bigger isn’t always better.
Spend some time reflecting on why you chose the home you currently own, and determine whether those reasons are still relevant today. For example, perhaps you chose a house on a large property because you had small children that needed space to play. If those kids have grown up, you may find that you are spending time or money managing a large yard that no longer sees much use. Or maybe you bought a home with 5 bedrooms expecting to welcome an aging parent into the house, and that is no longer the plan. Take some time to determine whether your current needs still match the home you have.
Want to learn more about downsizing your home in Northeastern Wisconsin? This team of local experts is ready to help you find your ideal new home, finding something that fits your budget and goals without sacrificing your priorities.
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