4 Tips for Downsizing Your Home

So many of us think bigger is better, but that’s not always true when it comes to your home. Larger houses come with larger expenses—think property taxes, insurance and utilities. Why pay more than you have to if you longer need all the space you once did?

If you’re dreaming of a home with less square footage to clean or a smaller yard to maintain, keep these in mind before you put your current house on the market.

1. Think about the best house to fit your lifestyle.

What are you really looking for in a new home? Do you want to keep the square footage but reduce the amount of time you spend in the yard every weekend? Or are you thinking about the future when you might not be as mobile as you are now? Do you want to live in a community with other retirees, or would you rather be downtown close to restaurants and cultural attractions? Downsizing doesn’t always mean moving into a smaller house. Instead, think of it as “right-sizing.” There are middle-ground options, like a yard-free townhouse or a three-bedroom ranch instead of a four-bedroom Colonial.

2. Crunch the numbers.

While there are costs involved with selling your home and buying a new one, it may make more financial sense in the long run to live in a smaller space. You’ll want to factor the value of your current home, how much you expect to pay for your future home, the cost to sell your home and move, and the cost to store any belongings. Less can mean less money, but it doesn’t always.

3. Start decluttering now.

You can’t take it all with you if you move to a home with less storage, so you might as well start going through everything you’ve accumulated through the years. Decluttering your home will also make it more attractive when it comes time to sell. You will also get a better idea of how much storage space you’ll need in your new home.

4. Develop a strategy.

Consider selling your home before you make an offer on the next one—you’ll have more leverage if your purchase isn’t contingent on the sale of your current home. This may mean renting for a while in your new location and finding an alternative source of funds for a down payment and closing costs. Tapping an existing home equity line of credit or borrowing from your 401(k) are possibilities. Additionally, consider a 15-year fixed mortgage, which usually has a lower interest rate than a 30-year loan but will carry a higher monthly payment. As you work through your options, a mortgage advisor can help assess what kind of loan is best for your specific situation and the amount you qualify for.

Downsizing can be an emotional journey, but with careful planning it might be the best decision you ever make.

Lisa Reid can be reached at 901-259-5653 or by email at Lisa.Reid@pnfp.com.