Selling a sizable home and choosing to use the profit from that sale to purchase a smaller home is often thought of as a great way to help a person gain more financial freedom. It is not uncommon for people to downsize to be able to spend money on other items that they would rather use their time on or out of necessity to help pay bills. Many times, as people get older, they will opt for downsizing to have a property that is more easily taken care of.
Downsizing is not always the big payoff that some people expect it to be. This could be for many reasons but most often it ends up for the purpose of not happily adjusting to a smaller property in the long term or not truly finding a less expensive home.
If you are considering downsizing, how can you ensure that it is the right decision for you and will not be one you wish you had not made? Here are three helpful questions to ask when you are considering downsizing.
Will it be possible to purchase a more affordable home with a reasonable mortgage rate?
In some areas, it is not possible to move to a smaller home and save money. Often this is because you purchased your home at a time when the price of your home was much less than current property values in the area and as such you have a very good mortgage payment that was locked in years ago.
You want to ensure that you will be able to make a lower payment than you currently have. In some cases when you have been in your property for several years this just may not be a viable option.
Will family circumstances change?
In some cases, homeowners choose to downsize because they have a change in their family dynamics. Maybe your kids are moving away or you have recently gone through a divorce or loss of a loved one. For many reasons, homeowners find themselves not needing as much space as they once did. This leads them to consider finding a home that is more easily manageable in finances and upkeep.
But you may find that over the long term this extra space might be needed again in the future. For example, bedrooms may come in handy when your adult children come back to visit with their children. Or if they end up needing to move back home temporarily. You may want to retain the space to be able to host people when they come to visit. Having a very small space can become frustrating if you aren’t able to host people you love.
Do you see yourself being able to comfortably make the adjustment to less space?
Moving to a smaller and new space requires lifestyle adjustments. Even if you are moving to the same amount of space or more space there will still be lifestyle adjustments to be made. With downsizing however, there will be some unique adjustments in your style of daily living. It could mean giving up space for hobbies that you enjoy or letting go of certain belongings that you never thought you could part with.
It is a good idea to take some time and carefully consider how you spend your everyday life and what things you enjoy in your current lifestyle that you might regret giving up if you downsize.
Downsizing has been beneficial for many people but for some, it is not always the most affordable or most comfortable of lifestyle adjustments.