4 Things to Consider Before Downsizing
Once the kids are grown up and move out, many parents look to downsize their homes. This makes sense of course on the surface. With fewer people in the house, there is less of a need for all of the extra space. Plus, a smaller house could mean a smaller mortgage or even no mortgage at all. And let’s not forget about lower taxes as well. With all of these benefits to downsizing, why would anyone consider keeping their current home?
I am going to walk you through four scenarios when keeping your current house may make sense for you.
4 Reasons for Not Downsizing
- Increased Mortgage Costs.
If you’ve had your house for many years, chances are you have no mortgage at all. By downsizing, you could easily have a monthly mortgage payment all over again. This is because downsizing does not mean a small housing cost. Many new condominiums are very expensive to buy and even communities for seniors are costly.
You could find yourself selling your house for a decent profit and still have to take out a small mortgage to afford it.
On the flipside, if you still have a mortgage, odds are you are close to paying it off. This means the majority of your monthly payment goes towards the principal. If you buy a new house, you will be starting the process all over again and end up paying mainly interest for the first handful of years.
- Rental Options.
If you aren’t thinking of buying a new home, then you have to take into consideration the rent in your area. In many areas of the country, the annual increase in rental prices is skyrocketing. This is forcing many to move to lower cost of living areas or into areas that aren’t as safe as they would like.
In addition, the above point about a monthly payment applies here as well. You will also have to consider if your monthly rent will be a new expense or higher than your previous mortgage payment.
- Boomerang Kids.
We all know the economy is slowly coming back. More and more kids are moving back in with their parents for a bit while they try to get their feet under themselves financially. If you downsize, you might not have the room to help them out. It would be tough to turn your kids away, but if you downsize you just may have to. If you might be in this situation see How to Handle Kids Moving Back Home after College.
- Holiday Visits.
Added to the point above is what to do during the holidays. Many times you want to spend this time with your kids and your grandkids. There is nothing better than having a fun morning making and eating breakfast together with everyone at the house. If you downsize, this might not be an option any longer.
While they could stay at a hotel, it just wouldn’t be the same. I know my in-laws fit this scenario perfectly. They have a 4 bedroom house that only has them most of the time, but come the holidays, the house is busting at the seams with 4 married children and 4 grandkids at the house.
They have said time and again the house is perfect for allowing everyone to get together and they are not interested in downsizing.
Everyone is different and every situation is different. For this reason, I wanted to point out a few times when it might make sense to stay put as opposed to downsizing. Maybe you can relate to these points and maybe not.
The key however is to take everything into consideration before making the decision. Home ownership is a big expense in our lives and it would be sad if you decided to downsize only to regret it shortly thereafter. Take all things into consideration and you will make the best decision for you.
More Topics for Homeowners
- Current Mortgage Interest Rates
- Bang-For-Your-Buck Home Renovations: What Pays Off and What Doesn’t
- 16 Ways to Lower Your Housing Costs
- Should We Move to a Smaller House?
- Should We Downsize? More Considerations
- Should You Take Out a Reverse Mortgage Loan?
- How to Figure Out Whether Or Not You Can Afford It
Besides all those factors you have mentioned above, one should also consider the moving costs- no matter how insignificant they apparently seem at present.