What You Should Consider Before Downsizing
There are many reasons why you may be thinking of downsizing your home. It could be that your children have moved out and you have many empty rooms accumulating dust. Or maybe you want a smaller house so you don’t have to deal with cleaning that unused space. Maybe you want to move to a smaller bungalow so you don’t have to worry about going up and downstairs each day. Whatever the reason may be, there is a lot to consider before downsizing and moving to a smaller home. Specifically, these are a few questions you might ask yourself before putting that for sale sign up.
What are your future plans?
Some people are eager for a change of scenery and a fresh start. Are you thinking about downsizing into a townhome, retirement villa, apartment, condo, or just a smaller space across town or across the country? Are your family members included in this decision? A home has a lot of sentimental value and can be tough to let go of. You also have to think about your furry or maybe scaley family members as well. Some apartments and condos have a strict no-pet policy in place. It will be a hard adjustment for your pets if all of a sudden they are cooped up in a tiny living space without a backyard when they are used to running around freely at your old home or worse if you’re not allowed to bring them at all.
Regardless of your reasons, It’s important that your living space meets your personal, social, and financial needs for your family.
When is it the right time to downsize?
There are some people who downsize earlier than expected if they have a mortgage that’s coming up for renewal or to take advantage of the hot housing market and low-interest rates. The last thing you want is to have to sell your house quickly (and for a lower price) if something unexpected occurs, so advanced preparation and planning are always a good idea. There are also other factors to consider, including what’s happening within your career, your commute, retirement options, proximity to your children and grandkids, and so on. Outline your entire timeline and what-if scenarios to ensure you have a plan, and a backup plan just in case.
How and what are you going to purge?
When downsizing your house, you must also downsize all of your treasures and furnishing. That can be a stressor and a half as well as being very overwhelming at times. Start with one room at a time sorting and purging all of your accumulated things you may or may not take with you. You can sell unwanted items online, hold a garage sale, or donate all of your belongings that aren’t needed, or just won’t fit in your new home. Just because your things don’t suit you any longer doesn’t mean they won’t be adored by a new owner.
What is your current home equity and profit?
If you’re not sure what price you could sell your home for, you can have it appraised by a lender or realtor to give you a general idea. Also, look at current list prices for your ideal downsized home to make sure it’s a strong financial decision for your family and how those prices impact your budget or profit margins.
If you’ve been paying down your mortgage regularly, and you have owned your home for several years, you have likely built up a fair amount of equity. Its value might even be twice or three times what you paid for it originally depending on how long you have owned your home. By downsizing into something smaller and more affordable, you can invest your profits into paying off debt, financing your retirement, or travelling.
Are you ready for the stress?
Selling your current home and purchasing a new home can be a scary and stressful thing to do. You still have to factor in your closing costs like property taxes, legal fees, home inspections, moving costs, real estate fees, and so on. If your mortgage term has not ended yet, you may have to pay a prepayment penalty as well. If you’re moving into a condo or a retirement villa, you may have maintenance fees added on top of your monthly payments.
Not only must you think financially, but you must also think about the entire process of moving to a new home. Little tasks like changing your address on everything you own can be time-consuming. When you’re planning on downsizing, it’s important to do your research on the current real estate market and think about all of the considerations you must have when moving to a new home. An experienced and reputable mortgage broker and financial planner, like myself, can help you determine your best move personally and financially. It’s my job to help you find the mortgage solution that suits your needs and to help you transition through the pros and cons of downsizing while keeping your finances in mind. If you have questions, I bet I have the answers. Give me a call at 705-315-0516 or click here to book a virtual appointment with me online at your convenience. I’m always happy to help, and I have options and rates the banks don’t.