{"id":3189,"date":"2017-11-22T15:48:39","date_gmt":"2017-11-22T23:48:39","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=3189"},"modified":"2024-03-18T08:42:45","modified_gmt":"2024-03-18T15:42:45","slug":"downsizing-house-to-save-money","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/","title":{"rendered":"Why Downsizing Your House to Save Money Is a Great Financial Choice"},"content":{"rendered":"

In the past several decades, the cost of housing has increased dramatically.<\/a> We don\u2019t expect it to slow down. Depending on its location, a house bought 20 years ago is worth exponentially more than it was in the \u201880s or \u201890s. That’s why downsizing your house to save money right now could be a great choice.<\/p>\n

The Benefits of Downsizing Your House to Save Money: A Quick Overview<\/h2>\n
    \n
  1. Maintaining a larger home costs more than maintaining a smaller home<\/li>\n
  2. You could make money on your home sale<\/li>\n
  3. You can use that money to make smart investments in your future<\/li>\n<\/ol>\n

    People buy large houses for many reasons, but those reasons aren\u2019t always practical. Regardless of why you bought a large home back in the day, one fact stands true now: that home is probably worth a whole lot more.<\/p>\n

    If you have a big home and you\u2019re not using the space, now is the right time to downsize. It\u2019s a hot market and you could fare well if you go about it correctly.<\/p>\n

    Here\u2019s why.<\/p>\n

    \"ceiling<\/a>
    Source: (Victor Freitas \/ Pexels)<\/figcaption><\/figure>\n

    The Bigger the House, the Bigger the Costs<\/h2>\n

    The larger the house, the more upfront cost, but what happens after you purchase it? Owning a large home is expensive, even if you’ve paid off the mortgage.<\/p>\n

    To start, your energy bill is going to be a lot higher even if you take care to turn off the lights because about 42% of the energy<\/a> used in most households is spent on heating and ventilation. If you have space in your home that isn\u2019t being put to good use, you\u2019re likely wasting energy and money keeping it temperature controlled.<\/p>\n

    If you\u2019re still paying off your mortgage, then you likely have an escrow account<\/a> with your lender into which you pay both property taxes and homeowner\u2019s insurance. The amount you pay into your escrow account every year depends on the cost of the mortgage and if you have a higher mortgage, you\u2019re going to put more money into that account.<\/p>\n

    The amount that you pay for property taxes depends on the local percent rate and your mortgage.<\/a> Similarly, the cost of homeowner\u2019s insurance premiums<\/a> are calculated based on mortgage, location, and whether or not you\u2019re in a hazard zone.<\/p>\n

    Between utilities, taxes, and insurance, you\u2019re spending a pretty penny on top of an already costly mortgage. That\u2019s not even covering maintenance costs, like plumbing and lawn care. If you\u2019re not using the space in your large home, the money spent on all of these factors is just wasted.<\/p>\n

    Make Money By Downsizing Your Home<\/h2>\n

    You save money on upkeep costs when you downsize but you also MAKE more money.<\/p>\n

    How? Equity.<\/p>\n

    Currently, most of the United States is in a seller\u2019s market.<\/a> Because of the competitive nature of this type of housing market, there\u2019s a good chance that the value of your home is higher than what it was when you first bought it. By selling your property and downgrading to a smaller, less expensive home, you\u2019re going to earn money from the equity<\/a> of your current home.<\/p>\n

    Bottom line is: depending on the cost of your new mortgage, you could make a sizeable profit after all is said and done.<\/p>\n

    \"computer<\/a>
    Source: (rawpixel.com \/ Pexels)<\/figcaption><\/figure>\n

    Use That Money to Make Smart Investments<\/h2>\n

    While it\u2019s tempting to spend the money you made through downsizing your house on a nice new boat or car, consider investing in something that\u2019s going to benefit you and your family in the long run.<\/p>\n

    More and more Americans neglect their retirement savings accounts. Many working-age families in the United States have little to no savings in their retirement account, with the median amount sitting at around $5,000.<\/a><\/p>\n

    Guess one of the leading contributors: high debt-to-income ratio from a pricey mortgage.<\/p>\n

    By age 45, you should have at least six times your salary<\/a> tucked away into a retirement account. By downsizing into a smaller, less expensive home, you could invest the money that you originally had to spend on mortgage bills, taxes, insurance, and utilities into your future by depositing it into an individual retirement account<\/a>, or IRA.<\/p>\n

    If you have children, you could put the money you saved towards their education. The student debt issue isn\u2019t going away anytime soon either. The average student in 2016 graduated with over $37,000 in loans to pay off<\/a>. Downsizing won\u2019t pay for an entire bachelor\u2019s degree but it could chip off some of the burden.<\/p>\n

    Any money paid up front on your debt is better than taking out another loan.<\/p>\n

    Don\u2019t have any debt and hold a handsome retirement account? If you\u2019re savvy and have some extra time on your hands, you could put your savings towards things like mutual funds<\/a> and real estate investment trusts<\/a> (REITs).<\/p>\n

    Worse comes to worse, a savings account<\/a> is a viable option. While most savings accounts are taxable, there\u2019s no limit to how much money you can deposit into it and you\u2019ll earn interest as it grows.<\/p>\n

    Depending on how much money you have on hand after the move, you could try a money market account<\/a> that offers an even higher interest rate. There\u2019s usually a minimum balance that needs to be met though, so keep that in mind.<\/p>\n

    Say you earned over $10,000 from your home\u2019s equity which you deposit into a money market with a 1.3% APY (annual percentage yield), you\u2019d be earning $130 a year, which isn\u2019t bad for simply possessing a savings account.<\/p>\n

    \"brick
    Source: (Shopify Partners \/ Burst)<\/figcaption><\/figure>\n

    How Do You Maximize Downsizing Savings?<\/h2>\n

    Whatever you do with your money is up to you, but unless you\u2019re smart about downsizing your home to save money, you might not even have the money to make such investments.<\/p>\n

    Selling your home isn\u2019t just a one and done process, and you should never go about it on your own. Real estate agents exist for a reason, and homes sold with the assistance of agents sell for about $60,000 more<\/a> than those sold solely by the owner.<\/p>\n

    It\u2019s hard to navigate the housing market, spruce up your listing, and write legible closing contracts. Downsizing your house on your own can be a nightmare. As a result, only about 8% of homes sold in 2015 were FSBO\u2019s (for sale by owner).<\/p>\n

    Are You Ready to Downsize to Save Money?<\/h2>\n

    Downsizing your home can save you a good chunk of money. You can put that towards worthwhile investments, like you and your family\u2019s future. To get the most out of this experience and avoid some of the difficulties that could hinder your goals, look for a top real estate agent on both the selling and buying end.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    If you have a big home and you\u2019re not using the space, downsizing your house to save money now is the right move. Here’s why.<\/p>\n","protected":false},"author":47,"featured_media":7850,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","cybocfi_hide_featured_image":"","footnotes":""},"categories":[220,319],"tags":[214],"class_list":["post-3189","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-downsizing","category-selling-advice","tag-downsizing"],"acf":[],"yoast_head":"\nWhy Downsizing Your House to Save Money Is a Great Financial Choice<\/title>\n<meta name=\"description\" content=\"If you have a big home and you\u2019re not using the space, downsizing your house to save money now is the right move. Here's why.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Downsizing Your House to Save Money Is a Great Financial Choice\" \/>\n<meta property=\"og:description\" content=\"If you have a big home and you\u2019re not using the space, downsizing your house to save money now is the right move. Here's why.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/\" \/>\n<meta property=\"og:site_name\" content=\"HomeLight Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/gohomelight\/\" \/>\n<meta property=\"article:published_time\" content=\"2017-11-22T23:48:39+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-03-18T15:42:45+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/hl-blog.homelight.com\/wp-content\/uploads\/2017\/11\/small-wooden-house-906912_1280.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"960\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Julia Aldrich\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@coolialdrich\" \/>\n<meta name=\"twitter:site\" content=\"@gohomelight\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Julia Aldrich\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Why Downsizing Your House to Save Money Is a Great Financial Choice","description":"If you have a big home and you\u2019re not using the space, downsizing your house to save money now is the right move. Here's why.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/","og_locale":"en_US","og_type":"article","og_title":"Why Downsizing Your House to Save Money Is a Great Financial Choice","og_description":"If you have a big home and you\u2019re not using the space, downsizing your house to save money now is the right move. Here's why.","og_url":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/","og_site_name":"HomeLight Blog","article_publisher":"https:\/\/www.facebook.com\/gohomelight\/","article_published_time":"2017-11-22T23:48:39+00:00","article_modified_time":"2024-03-18T15:42:45+00:00","og_image":[{"width":1280,"height":960,"url":"https:\/\/hl-blog.homelight.com\/wp-content\/uploads\/2017\/11\/small-wooden-house-906912_1280.jpg","type":"image\/jpeg"}],"author":"Julia Aldrich","twitter_card":"summary_large_image","twitter_creator":"@coolialdrich","twitter_site":"@gohomelight","twitter_misc":{"Written by":"Julia Aldrich","Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":["Article","BlogPosting"],"@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/#article","isPartOf":{"@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/"},"author":{"name":"Julia Aldrich","@id":"https:\/\/www.homelight.com\/blog\/#\/schema\/person\/bf5a283e9d10c189837c39b3faea8196"},"headline":"Why Downsizing Your House to Save Money Is a Great Financial Choice","datePublished":"2017-11-22T23:48:39+00:00","dateModified":"2024-03-18T15:42:45+00:00","mainEntityOfPage":{"@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/"},"wordCount":1166,"publisher":{"@id":"https:\/\/www.homelight.com\/blog\/#organization"},"image":{"@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/#primaryimage"},"thumbnailUrl":"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2017\/11\/small-wooden-house-906912_1280.jpg","keywords":["Downsizing"],"articleSection":["Downsizing","Selling Advice"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/","url":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/","name":"Why Downsizing Your House to Save Money Is a Great Financial Choice","isPartOf":{"@id":"https:\/\/www.homelight.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/#primaryimage"},"image":{"@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/#primaryimage"},"thumbnailUrl":"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2017\/11\/small-wooden-house-906912_1280.jpg","datePublished":"2017-11-22T23:48:39+00:00","dateModified":"2024-03-18T15:42:45+00:00","description":"If you have a big home and you\u2019re not using the space, downsizing your house to save money now is the right move. Here's why.","breadcrumb":{"@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/#primaryimage","url":"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2017\/11\/small-wooden-house-906912_1280.jpg","contentUrl":"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2017\/11\/small-wooden-house-906912_1280.jpg","width":1280,"height":960,"caption":"downsize small house"},{"@type":"BreadcrumbList","@id":"https:\/\/www.homelight.com\/blog\/downsizing-house-to-save-money\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.homelight.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Why Downsizing Your House to Save Money Is a Great Financial Choice"}]},{"@type":"WebSite","@id":"https:\/\/www.homelight.com\/blog\/#website","url":"https:\/\/www.homelight.com\/blog\/","name":"HomeLight Blog","description":"Real Estate Advice from America's Top Agents","publisher":{"@id":"https:\/\/www.homelight.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.homelight.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.homelight.com\/blog\/#organization","name":"HomeLight","url":"https:\/\/www.homelight.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.homelight.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2017\/11\/logo-hr-color.png","contentUrl":"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2017\/11\/logo-hr-color.png","width":1348,"height":262,"caption":"HomeLight"},"image":{"@id":"https:\/\/www.homelight.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/gohomelight\/","https:\/\/x.com\/gohomelight","https:\/\/www.linkedin.com\/company\/homelight\/","https:\/\/www.youtube.com\/channel\/UCimugR9XF17-OZ7B9fNnxWw","https:\/\/en.wikipedia.org\/wiki\/HomeLight"],"description":"Everything you need to know to sell your house faster and for more money. Articles, guides, and advice from top agents all over the U.S.","email":"support@homelight.com","telephone":"(888) 688-0350","legalName":"HomeLight","foundingDate":"2012-01-01","numberOfEmployees":{"@type":"QuantitativeValue","minValue":"201","maxValue":"500"}},{"@type":"Person","@id":"https:\/\/www.homelight.com\/blog\/#\/schema\/person\/bf5a283e9d10c189837c39b3faea8196","name":"Julia Aldrich","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.homelight.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/ed43bc6ff96754203b5af16282d80096bab1f1b93998a94c860d0c597d5f3a2d?s=96&d=blank&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/ed43bc6ff96754203b5af16282d80096bab1f1b93998a94c860d0c597d5f3a2d?s=96&d=blank&r=g","caption":"Julia Aldrich"},"description":"Julia holds a B.S. in Psychology from the University of Pittsburgh. Her writing focuses on research-based nonfiction and can be seen in The Pitt News, eCampus, and Madwire.","sameAs":["https:\/\/x.com\/coolialdrich"],"url":"https:\/\/www.homelight.com\/blog\/author\/julia-aldrich\/"}]}},"_links":{"self":[{"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/posts\/3189","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/users\/47"}],"replies":[{"embeddable":true,"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/comments?post=3189"}],"version-history":[{"count":0,"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/posts\/3189\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/media\/7850"}],"wp:attachment":[{"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/media?parent=3189"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/categories?post=3189"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.homelight.com\/blog\/wp-json\/wp\/v2\/tags?post=3189"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}