Downsizing a house really means selling your current home and replacing it with a new (and cheaper) one. The house you move into will be smaller than your current house.
While moving into a smaller home might feel like a step in the wrong direction, there are many situations where it makes perfect sense. It comes with numerous benefits.
Below are some of the most common reasons why people in Lincoln and elsewhere willingly choose to downsize their homes.
Should I Downsize My House In Lincoln NE? If So, What Are The Benefits?
#1 – The House is Too Big
Perhaps your children have moved out and you have 4 empty rooms in a large, secluded, country home. You are not getting the value from your home as it is. This is the perfect scenario where downsizing makes sense, as you don’t need the entire property.
But you will need to ensure that you find a new home that fits. There needs to be a significant price difference, taking into account all of the other fees (which can often run up to 8% in total). On a $500,000 property, 8% amounts to $40,000. So the property of choice would need to be in the region of $420,000, amounting to a $40,000 profit, to make sense.
This is a lot of money for downsizing to a more appropriate house, especially as 8% is on the high end. Obviously, these are simplistic estimates, and costs will vary. But you do need a significant difference to make the move worth it, especially if you have sentimental attachments to the property and the surrounding area. Moving is often stressful.
#2 – Lower Maintenance Costs
Smaller houses will have lower maintenance costs, such as utility bills. It costs more to heat larger homes and to maintain gardens and driveways. Over the course of many years, all of these maintenance costs certainly add up.
Everything that needs to be repaired will be more expensive in a larger house. There is more grass to cut, more curbs to paint, more windows to wash, and more roofing tiles to clean. Not only will it lower maintenance costs, but downsizing in Lincoln could save you some stress, as there is less to do and less to maintain.
#3 – Decluttering Your Space
Downsizing can be a great way to go minimalist and get rid of some old things you no longer require. Many people simply acquire too much junk over the years. By getting a bit creative, you can remove excessive material items and make some money while doing so. Sell your things on a site such as eBay, even if you are only getting a fraction of what you believe it to be worth.
Alternatively, you could give some of your stuff away to charity, given that it’s weighing you down anyway. If donating to a local charity, you can take advantage of the tax benefits.
Ultimately, you will end up paying less to the moving company, have more space in your new home, and pocket some cash besides (if selling your items online).
#4 – A Fresh Start
Sometimes, it is simply time to move on. Even if the house and surrounding environment are satisfactory to you, a move every ten years or so can provide you with a fresh perspective on life.
You can relocate to a new area with different people. Or you can also try out living in a new home in the same area – if you find a small house within a block, then you can make a lot of profit for minimal stress.
If you currently live in a country house, then you might want to try living in an apartment in the city with all amenities available to you. And if you currently live in a city, you can actually ‘downsize’ to a bigger apartment, though that may seem like a contradiction. You could sell an expensive inner-city apartment for a somewhat larger home in the country (that works out cheaper).
Downsizing offers the opportunity to make a change in what you are currently doing, while also pocketing some cash in the meantime. However, you may also have to say goodbye to close friends and relatives, and any other relations you have with the community (an advantage or disadvantage, depending on your current situation).
#5 – Extra Cash
As mentioned in point one, downsizing will result in more cash. The entire idea is that you move from a larger, more expensive home to a smaller one. The end result is that you will have more cash to pay off the mortgage, debts, purchase a new car, go on vacation, etc, etc, etc.
This is the primary reason why most people will downsize their homes. 69% of homeowners that downsized stated that cash was the primary reason for doing so. 23% of baby boomers downsized after their kids moved out. The three primary financial reasons for downsizing are:
- To save up for a specific future goal (such as retirement or education).
- To help you you to pay off existing debts (mortgage, student debt, credit card debt, etc).
- To Invest the money for the sole purpose of investing.
Are There Any Downsides to Downsizing?
Downsizing is typically a great idea, but it comes with a number of caveats. In terms of finalizing the transaction, All the documents have to be in order, and everything needs to be triple checked. After all of this has been completed, you then have to go through a moving process. One of the biggest is actually the moving process itself. Moving house can be a long and stressful endeavor, involving multiple parties.
Another difficulty in downsizing lies in the fact that you have to both buy and sell a home at the same time. Jiggling between the two can be a little bit tricky, as it has to be timed so they both happen at once.
This means that you can move in immediately after selling. But it’s also a lot of stress to do both of these at the same time. As a general rule of thumb, it’s better to sell first so you have the capital at hand to get the deal done.
To offset the stress and worry with downsizing, you could consider a local home buying service such as Element Homebuyers. They will give you a great price for your existing home, in cash, and you can then downsize to a new home. They have the capital at hand, eliminating much of the messy credit proceedings, and are experienced in buying houses and then fixing them up.
Of course, you still have to contend with the fact that you are moving into a smaller home than you are used to. This is something you may have to come to terms with, but it should not be too much of a deal. You are getting many benefits (described above) when you downsize. Just make sure it is something you want to do beforehand.
The Bottom Line
Downsizing can be a great way to save a lot of money while also getting rid of some old things. If you don’t use all the space that you currently have, then it makes a lot of sense. And if you have debts to pay, it makes an enormous amount of sense.
To make the transition as smooth as possible, a local home buying service Lincoln will give you a quick sale for the property without the need for repair. The quote is free and there are zero fees when using these providers.