Many homeowners are reaching a point when they need to decide where they want to live for the next chapter of their lives. You might be considering downsizing if your children have left the nest, you’re close to retirement, you want a lighter ecological footprint, or you’re just tired of maintaining a big home.

Sometimes smaller homes are more suited to your changing needs, and moving means you can also land in a more ideal location.

Downsizing your home can reduce your cost of living in several ways. Choosing a smaller, more affordable home can leave you with more money for other financial goals, such as traveling, saving for retirement, building an emergency fund, paying off debt or paying children’s college tuition.

Let’s review some of the benefits of downsizing.

Advantages of Downsizing Your Home

Smaller Mortgage

A key part of why downsizing is still cost effective today, even when mortgage rates are higher than they were a year ago, is the record-high level of equity homeowners have. Leveraging your equity when you downsize can lower or maybe even eliminate the mortgage payment on your next home.

More Affordable Home Insurance

The size of your home affects your insurance premiums, with smaller homes generally being less costly to insure. Most condos and townhouses cover this type of insurance in their HOA fees, and you would only need to get the equivalent of renter’s insurance, which is very affordable.

Less Maintenance

Bigger homes generally need more maintenance, simply because there are more things that can break, and there is usually more property to care for. Moving to a smaller home or townhouse with a smaller yard can eliminate the cost of paying a gardener, and can reduce overall maintenance costs such as roof, deck, driveway, or other exterior repairs. You may even have an HOA that will cover the cost of such repairs entirely.

Cheaper Utility Bills

Utility bills are usually lower in a smaller home, since there’s less space to heat or cool, and having less yard or lawn to care for can significantly lower water bills.

Membership Savings

If you downsize to a senior living community or condominium complex with amenities like a fitness center, swimming pool, tennis court, or clubhouse, you won’t have to pay for gym, club, or pool memberships.

Fewer Auto Expenses

If you move to a community that’s walkable or has good public transportation, you might be able to give up one of your cars, reducing maintenance, car payments, car insurance and fuel costs.

Bottom Line

Being in a strong financial position is one of the most important parts of retirement, and downsizing can make a big difference.

If you’re feeling stuck about whether downsizing is right for you, I’d love to help you understand how much equity you may have in your current home and what options it can provide for your next move.