It’s a well-known saying that less is more. While this idea works in many different facets of life, in today’s economy, applying it to the property you own works as well. Downsizing your home is a growing trend among retirees and households with grown children. However, these people aren’t the only ones doing it. According to Investopedia, a number of money-conscious first-time homebuyers are also cutting down on square-footage.
Save cash on less space
Regardless of whether you are a retired, an empty nester or entry-level buyer, a smaller home often means spending less money. Generally, the smallest home on the block will be the least expensive. However, it’s important to remember that this depends heavily on location. For example, a 2,500 square-foot property in the suburbs could be much more affordable than a 1,000 square-foot apartment in a city center.
Additionally, a smaller living space will be easier to heat and cool and require a smaller down payment. This can yield some significant savings and cut down on your out-of-pocket expenses.
Lower mortgage payments
One of the best things about a small house with a low price point is that your mortgage payments will most likely be more affordable. You shouldn’t put more than 30 percent of your income toward housing. If you are on the verge of retirement, and will be switching to a fixed-income, downsizing your property could spend less than this share and free up some extra cash for other ventures.
More affordable property taxes
Besides mortgage payments, property taxes are usually the second-largest expense for any homeowner. However, unlike your mortgage, you can never pay off your taxes. With this in mind, depending on where you live, if you cut the size of your home in half, your taxes with generally be reduced by a similar amount.
To put it simply, the smaller you home, the less care and upkeep you will have to worry about. This is especially important if you want to downsize into a retirement home. If you have a home that it too large, it can be difficult to keep up with in your senior years. Also, if your move to a property with a smaller lot size, it will be easier to keep the landscaping in check.
Owning a home is a major financial step and should be part of your overall financial plan. After making a mortgage rate comparison to find the best loan, Freedom Mortgage can help you stay on top of your mortgage.
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