3 Money Benefits Why You Should Downsize Your Home
Moving to a smaller house may make you feel like you are taking a step down. However, upon taking a closer look, you will realize there are quite a number of benefits that come with downsizing. You will save money, reduce clutter in your life and save time when you opt to downsize. Downsizing offers a fresh start for you and your family.
Downsize The Right Way
Downsizing may mean smaller mortgage payments and spend lesser time maintaining the house. Here are tips which will help you downsize without the risk of future regrets.
- Think long-term
- Keep it functional
- Check for hidden costs
- Focus on big picture
The Big Money Benefits of Downsizing
Assume that you reduced your mortgage repayment by $500 a month and used that cash for other important things. Here are the three benefits to reap;
Attack Your Huge Debt
Downsizing is a great way to reduce expenditure especially if you have been struggling to do so. For some homes, the loan can be repaid within 2.5 years instead of 10.
The $500 a month can end up slashing seven years and some eight months off your loan repayment term.
Boost Your Retirement Fund
It becomes extremely easy to build wealth for your future when you are debt-free. Downsizing provides you with a totally funded emergency source which will make you debt-free.
Clear Your Mortgage
It is possible to trade off your mortgaged home with a free-debt one. You should use the proceeds from your current home to buy a smaller cheaper but debt-free one. You may be unable to pay cash for your new home. Take a fixed-rate mortgage and pay 20% down payment. Use the $500 that you have been left with after downsizing to pay your monthly mortgage payments. By doing this, you will be able to clear a $200,000 mortgage of ≈4% within 10 years. You will have saved at least $25,000 in the end.
There are times when downsizing is not all that appealing. But it is advisable to look into it if you prefer a simpler life and saving money. Look for a professional real estate agent to help you determine how much your home is worth and the options you have for cutting down costs.