The old saying “less is more” may also hold true when it comes to the size of your home. It may be tempting to think that the best home is cavernous, with lots of extra square footage you can fill with possessions over time — but that’s not always the case. There are many potential short- and long-term benefits to downsizing. Here are just a few ways going small can help ensure your home remains a haven — and not a hindrance to your financial goals.
Lower PITI
Downsizing has the potential to reduce your mortgage payments as well as many other costs associated with your home — including taxes. For example, if you pay $6,100 a year in property taxes, moving to a home that costs 25% less could save you $127 a month. Your insurance premium may be lower for a smaller home as well due to reduced costs of labor and materials needed to affect repairs in the event of a claim.
Small Space Efficiency
A cozier home can reduce your environmental footprint and also help save on resources, particularly if you’re downsizing your lawn as well. You’ll have less area to maintain, making it easier to handle yard maintenance or other chores yourself instead of hiring someone to do it for you. Heating and cooling less square footage is typically less expensive, leading to lower utility bills and a potentially less costly HVAC system. Moreover, a smaller home can promote a more minimalist lifestyle, encouraging you to prioritize quality over quantity and cultivate a greater sense of contentment with fewer material possessions.
Fortify Your Financial Future
The economic benefits of downsizing are long lasting. A more affordable home can lead to valuable home equity, which could help fund retirement savings or other financial goals. A smaller home may also help you pay off your mortgage sooner, freeing up extra money each month to fund a dream vacation — or an earlier or more comfortable retirement. And the savings you’ll accrue by downsizing mean you’ll be better equipped for a financial emergency.
Good Things Can Come in Small Packages
While many homebuyers may automatically aim for a bigger place each time they move, bigger isn’t always better when it comes to your bottom line. If you assess your lifestyle honestly, you may find that your square footage exceeds your needs and is creating an unnecessary strain on your budget. Think carefully about your actual requirements, calculate what that unused space is really costing you — and consider the many potential benefits of downsizing.