“We have too much house.”
Maybe you are a Baby Boomer and find yourself uttering this sentence on a regular basis. At one time, a larger home seemed to make sense. But things have changed. Life has changed.
Or maybe you are not a Baby Boomer, but the thought of downsizing your home appeals to you. You are not considering a tiny house, just something smaller.
How do you know if now is the right time to downsize your home? Here are a few signs that may suggest you need a smaller home:
- You house payment hinders your financial health and generosity. For many of us, our mortgage payment is the largest monthly expense in our budget. I recommend having payments that are less than 30% of your after tax pay. If you are struggling to give and pay the bills, now may be the time to take a look at how much home you really can afford.
- You’ve become tired of the upkeep. Typically, larger houses come with larger upkeep requirements. There is the financial side to it—insurance, home repairs, and lawn care can turn your dream home into a financial nightmare. But you may also find yourself tired of all the dusting, vacuuming, and other necessary tasks that come along with a larger home. You know you will have to do these tasks in a smaller home as well, but you like the idea of not doing them as much.
- You have a significant amount of unused square footage. You have many unused bedrooms and bathrooms. You have a bonus room that is rarely touched. Having this much square footage is making less and less sense for those who live in your house.
- You’ve retired. Retirement is a trigger point for many people. Usually, it means that there are no longer any kids in the house. For many, retirement also means a reduction in income. So with fewer occupants and less money, it seems reasonable to consider a smaller home.
- You can make a lot of money off the sale. I hope everyone falls into this category. You have paid down your mortgage; your house has appreciated, and you are able to reap the rewards of your financial discipline. You can use the proceeds to purchase a smaller home with cash. No more mortgage payments for you. Congratulations on your increased cash flow!
For some, downsizing relieves mental and financial frustration. Consider these signs. Downsizing your home may be the next financial move you need to make.