Top 5 Reasons to Downsize

The American dream is all about homeownership, right? Actually, the real American dream seems to be about homeownership in a hugely impressive house with all the bells and whistles that’s all decked out and done to the nines and allows you to the keep up with the Joneses. But while many of us case the house down the street that’s 450 square feet larger and has a pool and is a WHOLE WORLD BETTER than ours or sit around watching hour upon hour of HGTV dreaming of our “one day” (ahem), home trends may actually be going the other way.

Whether you are a first-time homebuyer or a downsizing retiree—there is a definite trend toward people buying and building smaller homes. It’s a fact, houses are getting smaller. It seems there is a new world-view developing – people are shunning the ideals of bigger is better in exchange for a more modest lifestyle, despite what is in their pocketbooks. Pocketbooks have quite a bit to do with going smaller, but saving money only accounts for a few of our 5 reasons to downsize.

A Lower Mortgage Payment

Lowering expenses is often the single most important factor in downsizing for one simple reason: the mortgage is typically the single largest monthly expense a homeowner has. A mortgage payment “routinely accounts for 30% or more of their gross income often accounting for 50% of net income. Downsizing your house can have a dramatic and direct effect on mortgage expenses. At the very least, it can result in a significant reduction in your monthly expenditures, a significant increase in your free cash flow and massive savings in interest over the term of your mortgage.

Property Tax Savings

A smaller house should mean a smaller property tax bill if you are moving to the same general area. Moving to a tax-friendly state once you retire could increase those savings further.

Savings on Utilities

A smaller home will take less energy to heat and cool. Plus, if you buy newer appliances, that can increase the efficiency, which means lower bills and less impact on the environment.

Less Maintenance

With a smaller home, you can expect to have less home maintenance – especially if you are significantly reducing the size of your yard or going from a single-family home to an attached residence. The biggest plus: Fewer rooms means fewer rooms to vacuum. That may just be reason enough for some people.

The Money Saved can Pay for Retirement

If you are near retirement and looking for ways to cut expenses, downsizing to a smaller home is a great option worth considering. If you have a large amount of equity in your home, you can inject it into your retirement fund. And any monthly savings can go toward your retirement account as well.

-From MSN Real Estate