Ultimate Guide On How Much Can You Make From Downsizing Your Home.
People decide to downsize and relocate for many different reasons. It’s certainly a great way to save or even make some money without giving up too much. If this step makes sense for you, you should think about executing it.
However, there are some things to consider before you make your final decision. How much can you make from downsizing your home? Is this process worth the cost-effective outcome, or does it have too many negative aspects? Let’s dive into the subject and explore these questions further.
Be realistic
Before deciding whether downsizing your house is something you’d be interested in, make sure you’re realistic with the numbers. Although you can make money by downsizing, not everyone does so.
There are plenty of different tools online that can help you conclude how much your home is worth. Seeing this and comparing it to the statistics will get you one step closer to determining just how much money you’ll save if you decide to downsize your home.
Be as objective as possible when looking at your home’s flaws. Real estate agents will surely take all of the good and bad aspects of your home into account when giving you an estimate. If you’re unable to be objective while estimating the worth of your home, it might be best to call professionals.
Don’t get your hopes up if you’re downsizing your home in 2021
Seeing how the housing market is a bit sluggish at the moment, it’s natural that things won’t go as smoothly as you’d think. It’s taking longer than expected for many sellers to offload their homes.
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On average, it takes about seven months from the moment of listing to selling and moving. Covid has made things a bit harder. So, before you start thinking about maximizing your home sale price before downsizing and setting the process into motion, think about whether the timing is right. Putting this off a bit could be a smart move.
Why should you downsize your home?
There are many reasons for home downsizing. If you own a larger home, usually there’s a larger family in the picture as well. Once your kids grow up and move away, it doesn’t make much sense financially to keep living in a huge home.
Vacating the rooms that you no longer need and cutting the power isn’t the answer. Well, it’s not a permanent one for sure. This is because bigger homes cost quite a bit more to insure and maintain, even if you’re not using the whole space. Even though downsizing your house might be tough emotionally, it’s often the right thing to do.
Living in a smaller property can bring significant financial benefits. Especially if you’re planning on retiring soon, downsizing the home you live in makes sense.
Your mortgage payment will be significantly lessened
If you’re looking at a rough estimate, there’s a way to calculate how big your mortgage payments would be if you decided to sell your current home and downsize. While doing this, you need to consider the current appraised value of your home.
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Take into account how much, percentage-wise, your downsized home will cost. Applying the equity you’ll build up and considering the current interest rates should give you a precise estimate of how much you’ll save on your mortgage payments alone.
You’ll save on property taxes as well
Another field that’ll make things easier on your wallet after downsizing your home is your property taxes. If you find a home with more modest taxes, you will feel a big difference.
Although these numbers aren’t as sky-high as some expect them to be, they are significant. Look at the bigger picture, and you’ll see that you’ll save quite a sum of money.
Think about utilities
Although this may be the least impressive money-saving factor of the bunch, it’s still worth mentioning. If you downsize to a home that’s about 25% smaller, you’re looking at about 100$ per month in savings.
Consider the disadvantages of downsizing
Even though downsizing your home can make a lot of sense financially, you need to consider the burdens that’ll come with it as well. Only then will you be able to make a decision you’ll be content with.
- You’ll have fewer belongings
Downsizing to a smaller home comes at a price. It most often results in selling, donating, or throwing away some of your furniture and belongings. It’s simply a logical turn of events. Emptying all those rooms makes sense. However, that doesn’t mean that it’s not emotionally or otherwise draining.
- You won’t have room for visitors
If you’re used to having guest bedrooms, this likely won’t be the case once you downsize your home.
- Less room in general
Homeowners usually report feeling cramped because of a lack of space. This, however, doesn’t last long since it’s natural and easy to get used to these things.
- You’ll feel like you’re leading a less prestigious lifestyle
If appearances are important to you, home downsizing might sting a bit. You’ll feel as if you’re downsizing on the social ladder as well.
Save up while relocating too
Once you’ve decided to downsize your home, you have a relocation waiting for you. Nothing is stopping you from saving a bit during moving as well. To organize a frugal relocation, you need to be orderly, disciplined and hire the right people for the job.
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Start planning as soon as possible and you’ll be able to get back some of the money spent on moving.
Consult a financial advisor
If you’re not feeling too confident about accounting for all the benefits of downsizing, it’s best to consult someone who is. Talking to a financial advisor can be a great thing. Apart from helping you see the cost-effectiveness of home downsizing, they might also see some things that you can’t.
Consider other ways of making money
If you’ve decided to wait and not downsize your home right now, that’s okay too. You do you. You can always look for some other ways of making money. If you’re able to, renting out spare rooms is quite a frugal activity. It’s also a great way to meet new people and create new experiences for yourself.
Conclusion
Talking about precise and concrete numbers is out of the question since there are too many specific factors that determine how much you can make from downsizing your home. As stated, you can do so in more than one way.
Nonetheless, you should take the time to consider what you’ll be giving up and whether this trade is something that suits your wishes. Don’t do anything you’re not comfortable with, and you’re guaranteed to have a good experience.
