15 Signs It’s Time to Downsize Your House
It’s exciting to move into a mega five-bedroom, five-bathroom house. But it’s equally as exciting to downsize into something cozier.
Sometimes we buy big houses because we need them to support our family.
A large house may suit our particular lifestyle.
And sometimes we want a big house just because we can afford it.
However, there may come a time in your life where you longer need a behemoth of a home, and downsizing starts to sound like the right call.
Here are some common signs it’s time to downsize.
All The Kids Have Moved Out
Buying a larger home to support a family makes a lot of sense.
Five kids aren’t all going to fit into a two-bedroom, one-bathroom house comfortably. Could you imagine that?!
It makes sense to move into a larger space to support a large family if you have one.
Eventually, what happens?
Maybe all the kids go off to college.
Some of the kids may get jobs out of high school and move out.
Or maybe they move in with a significant other.
Whatever the scenario, it’s likely your little ones will move out at some time, which will leave you with tons of empty space.
It might be time to downsize.
You Want to Lower Your Tax Liability
It’s no secret, but the larger your house, the larger your tax liability every year.
It’s unlikely your property taxes will go down. Instead, they’ll probably go up.
Depending on where you live, property taxes may be adjusted by the municipality:
When homes sell.
On a set schedule, such as once every two years.
Or when homes undergo improvements.
Should you find yourself tired of paying high taxes, it might make sense for you to search for a smaller house with fewer property taxes.
You Want Lower Mortgage Payments
The larger your house, the larger your mortgage payments.
We all know it’s more expensive to buy a 2,000 square foot house than a 1,000 square foot house.
One way to significantly lower your mortgage payments is to move into a significantly cheaper and likely smaller house.
Buying a smaller house can also help you save money on private mortgage insurance (PMI).
PMI typically costs half a percent to one percent of annual mortgage payments and is required when you can’t come up with 20% of the down payment.
It’s much easier to come up with a 20% downpayment on a cheaper, smaller home than a larger one.
You’d Like To Reduce Your Insurance Payments
Insurance payments are higher on larger homes than smaller ones.
Which makes sense; there’s a lot more to insure.
You may be able to reduce your annual insurance payments by downsizing to a smaller property.
Be sure to shop around to find the most comprehensive and budget-friendly homeowners policy you can after downsizing.
Although diving into the world of insurance is beyond this article’s scope, you should remember cheaper isn’t always better.
A cheap policy could leave you high and dry should you need to file a claim. So be careful!
You’ve Recently Retired And Transitioned To A Fixed Income
Transitioning to a fixed income may prompt you to reconsider how much you’re paying for the above items we discussed.
Mortgage
Taxes
Insurance
Thankfully, your mortgage won’t change (Unless you have an adjustable-rate mortgage).
But, insurance premiums and taxes are almost guaranteed to rise.
Increasing expenses are a fixed income’s worst nightmare.
So if you’re concerned you won’t be able to keep up with your property’s rising holding costs, it might be wise to downsize to something more manageable.
You’re Tired of Maintaining so Much Property
Who’s favorite thing is cleaning and maintaining a house?
It certainly isn’t my favorite thing!
There’s so much more to clean and maintain on a larger property than a small one.
And as your house ages, your yearly maintenance bill can start to keep up.
If you’re tired of having to maintain five bedrooms, countless hallways, multiple bathrooms, and all the other extra space you no longer use, it might be time to downsize.
You’re Ready To Cash Out Your Equity
You’ve spent years and years diligently paying your mortgage.
You have never missed a payment. Maybe you even paid early and a little extra to help save on interest.
Thanks to all your hard work and discipline, you have a substantial amount of equity built up in your house.
Have you recently been thinking about how great it would be to sell and have a fat stack of cash in the bank?
Now might be the right time to sell, pull out your equity, and move somewhere more modest.
There Are Multiple Rooms You No Longer Use
There may have been a time where every room in your house was fully utilized.
The kids had their rooms.
You and your partner both had your own home office.
You set up a game room or guest room that was used almost daily.
But now, things have changed, and those rooms sit vacant collecting dust.
If you find yourself no longer utilizing multiple rooms in your house, it may make sense to downsize and save money.