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Downsize Your Home and Upsize Your Wallet
Posted By Ron On March 30, 2011 @ 4:45 AM In Mortgages | Comments Disabled
Most of us think downsizing a home is the arena for retirees and empty nesters, but in today’s economic environment, downsizing a home can make a lot of financial sense.
If you run your financial life like you’d run a business , downsizing a home can be a natural step. Companies habitually shut down non-performing facilities, discontinue product lines, or take other drastic measures to free up the firm’s finances. When a company takes these steps, their stock (in many cases) rises because Wall Street investors recognize that lower expenses can lead to bigger profits. The same thing occurs, on a smaller and much more personal scale, when you downsize your home.
A smaller home could mean a smaller price – and a smaller payment. If you lose your job, wouldn’t a 50 percent smaller house payment be nice? The monthly mortgage  payment is generally the largest single expense anyone will face. It regularly accounts for 30% or more of gross income – often accounting for 50% of net income. Downsizing your house can have a dramatic and direct effect on those 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 loan … not to mention the possibility of using the proceeds from the sale of your larger home to buy the smaller one obviously resulting in a much smaller mortgage.
If a mortgage  is the biggest expense consumers face, taxes are a close second and downsizing a home can result in a much lower property tax bill. Real estate taxes, unlike mortgage  payments, never go away and very rarely decrease. Downsizing your home can minimize your real estate taxes. Simply moving from a 3,000-square-foot home to a 1,500-square-foot home can cut your taxes by half.
Some utility bills won’t be affected: your water heater (if the same size), freezer, refrigerator, stove, washer/dryer, and dishwasher will still run on your old schedule. What WILL change is your heating and air conditioning bills. There’s a good chance your electricity bill will also decrease since you would have fewer rooms to light.
You’ll have a smaller roof to replace, less carpeting to replace, a smaller heater/AC unit to replace, a smaller yard to mow, a smaller driveway to pressure wash or resurface, fewer rooms to paint, and on and on.
With 13% of all U.S. homes currently VACANT , downsizing a home may be a challenge, but if you’ve made the decision and can find a buyer, moving into a smaller home  can take some of the uncertainty out of your personal economy. Scary home prices, scary energy prices and scary gasoline prices all add to the uncertainty so the financial benefits of moving to a smaller place are well worth exploring.
Besides the substantial cost savings, moving to a smaller place can have other benefits. You’re likely to have a considerably smaller “honey-do” list. With your newfound time, you can start a hobby, visit friends , travel , or simply relax instead of spending all those hours cleaning, repairing, maintaining, improving, or fixing your oversized house.
Like any major lifestyle decision, planning is the key to your success. Before you take such a drastic plunge, consider all the angles. Think about your current home and how many rooms you currently have. How many of those rooms do you actually use? How much time do you spend in that basement that you pay to heat and cool? Before you call the movers, however, remember to thoroughly think through your reasons for moving. Is a new lifestyle right for you? Can you live in a place where the neighbors are close? What will happen to all your stuff? Will you sell it, donate it, or give it to friends  and family?
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 13% of all U.S. homes currently VACANT: http://articles.chicagotribune.com/2011-04-04/classified/money-us-housing-vacancy-rates-1-20110404_1_vacancy-rates-vacation-properties-second-homes
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