There are many things to consider when planning to sell your home to downsize into a smaller residence. Perhaps you’re in a home that was perfect for raising a family, but now you find yourself in an empty nest. In other situations, you might be in a large older home with inadequate insulation that needs considerable upgrading. Another example could be that you just simply want to scale down from high mortgage payments, taxes, and expensive maintenance costs to a more affordable smaller home with lower maintenance or even sell your larger, expensive home and purchase two smaller homes or condominiums in the Lakes Region and the second one in Florida or Carolina’s.
We all go through those decisions, and sometimes choosing a smaller, more affordable home can leave you with more money for other financial goals such as traveling, saving for retirement, building an emergency fund, paying off debt, or paying children’s or grandchildren’s college tuition.
Research performed by Retirement Move indicates the perfect age to downsize is 64. However, so many circumstances could broaden this age bracket statistic. You might not just walk away with more money but also simplify your life and reduce your home maintenance and utility cost for years to come. There are many things to consider when planning to sell for financial reasons; here are a few examples:
- Tax rates fluctuate from town to town. For example, based on the property tax rates from 2021, selling a $500,000.00 home in Plymouth with a property tax rate of $30.49 and moving to Bridgewater with a tax rate of $8.27 would amount to a tax savings of $11,110.00 per year. That’s $333,300.00 in potential savings over the life of a 30-year mortgage. Keep in mind the savings will be even greater if you downsize to a smaller home at a lower tax assessment.
- If you’re in an empty nest. You are not only paying taxes on your empty nest, but you are insuring the now extra space and paying to keep warm for winter with home heating oil and electricity at an all-time high. The potential savings from downsizing can add up quickly and can often offset other financial factors, such as rising interest rates.
- Maybe you are in an older home with inadequate insulation, and it costs a fortune to heat. Especially now with the price of home heating oil on the rise and electric rates have doubled. Moving from an older home to a more modern home that is built to today’s construction standards will provide you with more energy efficiency that could save you a bundle.
- If you still have a considerable mortgage with high taxes, you might be in a position to pay off your mortgage, get rid of those high taxes, and pay cash for a smaller home. Less debt or no debt is always good. Maxing out debt to income ratio on a home is a recipe for disaster.
- Smaller homes encourage more family bonding, and it forces families to remove more baggage and lessen the temptation to accumulate. Remember simplify! Why collect all sorts of furniture, collectibles, clothing you haven’t worn in years, decor, and junk you don’t need? You might be shocked at how much you have accumulated over the year! Start throwing things away, donate to charitable organizations and give items of value and sentiment to family members.
- Smaller homes are easier to maintain, you spend less time decluttering them, they are less expensive to operate, living small means you incur less debt and less risk, and owning a small home is mentally freeing — the bigger the house we own, the more the house owns us, this can result in a lot of wasted mental energy where we’re held hostage to everything we own. So… buy small and free your mind!
- You free up more time…less cleaning, less maintenance, less taxes, smaller mortgage, lower utility costs, less stress, and most importantly, it allows you to free up more time to pursue the things in life that really matter.
So, to summarize some of my thoughts on downsizing:
- Less is more — yes, it’s true that a smaller home does have less storage… I recommend having a garage sale.
- So, I guess I get to one of the best attributes of all… smaller homes are in a wider market to sell. It’s affordable to a larger percentage of the population than a more expensive, less affordable one.
With the rising cost of everything from food to gas, countless American families are struggling to make ends meet. Stretching a budget too thin can make families have no choice but to buy groceries for their family or pay bills on time. Unfortunately, this is becoming more and more common. However, selling may not be the best option for everyone’s situation.
If you currently own your own home and wish to sell, be it to downsize, save on energy, or just cash in on your home equity to pay off debt. It’s a great time to see what your home is worth in today’s market. Sellers are finding out that selling in today’s market can be as life-changing as winning the lottery.
Feel free to call me anytime for real estate advice and a Current Market Analysis on your property’s value or to discuss what options may work best for you.
This article was written by Tucker McDonough of Roche Realty Group. Tucker can be reached on his cellphone at 603-530-2026 or by email at tucker@rocherealty.com. Roche Realty Group has offices in Meredith and Laconia, NH, and can be reached at (603) 279-7046 or (603) 528-0088. Please feel free to visit www.rocherealty.com to learn more about the Lakes Region and its real estate market.
