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Ready to embark on the journey of downsizing? It may be time to say goodbye to an expensive home in exchange for a smaller, cozier living space.
Downsizing is a great way to take control of your finances and free up extra time. Reduced housing costs are an obvious perk, but don’t forget the energy savings that come with lessening how much you have to maintain.
Although downsizing may seem like the ideal choice for an empty nester, it can bring its own set of challenges. Adapting to smaller living space has been known to be difficult and requires careful thought when considering this move.
Moving to a new neighborhood can be daunting; uprooted from the support network you’ve depended on for so long is sure to cause worry.
Keeping the success of your life in mind, here are some essential guidelines to remember when downsizing.
Do’s and Don’ts of Downsizing
Do Think about the Savings Included
As inflation continues to cause financial strain, more and more people of all ages are turning towards the concept of downsizing; younger individuals, in particular, are recognizing its potential benefits when it comes to reducing housing costs.
Even those traditionally thought likely for this kind of lifestyle shift – retirees without children living at home – now have many companions looking for ways to make ends meet.
“We’ve started to see more of a push here at the end of 2022 of people looking to downsize and purchase tiny cottages. We’ve seen different ages also downsize,” Justin Draplin, CEO of ECLIPSE Cottages, said.
Ditching your large house for a more compact abode could be a great way to cut costs.
Not only will you save money by reducing mortgage payments, but the smaller size can also lower associated housing fees such as property taxes, insurance premiums and funds for maintenance.
Read also: Retail Real Estate Market Surge Returns
Do Observe the Current Market
Downsize in today’s real estate market, and you could find yourself struggling to source the perfect home for your needs. What’s more, it can be a highly emotional process, too; one which requires careful consideration of both financial and personal factors.
Plus, downsizing your home in the current housing market can be tricky, but being flexible with timing could help you reap great rewards. Consider waiting a little longer for inventory to increase and secure yourself an even better deal.
Do Think About the Storage Cost if Your Decision Isn’t Permanent
Savvy savers may choose a smaller home as an interim step while they get their finances under control. No need to part with your beloved furniture, either – storage is the perfect solution that allows you to reap the benefits of downsizing without sacrificing any treasured items.
When moving forward with your plans, consider the costs of storage options to ensure a pleasant experience. Researching prices ahead of time can prevent any unwanted surprises when it comes to keeping all your items safe and secure.
With the average storage unit cost around $190 a month, how much you pay for your own depends on where you live and what needs to be stored.
Make sure to research options carefully before signing that dotted line.
Do Study HOA Fees and Rules concerning Your Home
For those looking to downsize, many opt for the townhome or condo life found in housing communities. Unfortunately, these dwellings come with HOA dues and rules.
If you’re looking to save money through downsizing, make sure the housing option you choose meets both your budget and lifestyle needs. Investigate HOA fees with an eye on affordability and any rules that may affect how you live.
When deciding on living within an HOA, make sure that their pet policies and rules surrounding running a business from home are comfortable for you. After all, your furry friends shouldn’t miss out.
Don’t Undervalue its Mental Perks
Downsizing is a great way to reduce stress and help your financial situation. In addition, you can focus on more important things in life without the burden of maintaining a large home – like family or leisure activities.
“When you think with anxiety about having to clean that room you never use, it’s probably a good time to consider downsizing,” Draplin said.
Don’t Conclude Downsizing Automatically Saves You Money
Downsizing your home could be a great way to save money and simplify life, especially if you already own your current property outright.
However, with mortgage rates being much higher than usual in today’s market, it can also become expensive – so think carefully before taking the plunge.
Mortgage interest rates can quickly take a bite out of your budget if they’re not monitored. Of course, doubling could have no impact at all when it comes to saving money, so be sure to keep an eye on the rate you pay.
However, with most home prices on a steady rise, it may be more difficult than expected.
Read also: Mortgage rates tipped to remain as is while interest rates go up
Don’t Take the Financial Perks of Owning a Bigger Home for Granted
A large home may require a bigger investment to keep it comfortable, but these costs can be offset through potential monetization opportunities.
If you possess extra living space or parking spots, it’s the perfect opportunity to generate some income.
Renting out an unused upper level in your home or offering a much-needed spot on busy streets can be a tremendous financial gain with minimal effort – even if you live in smaller dwellings.
