Your home may be your castle, but you need to know when to pull up the drawbridge and seek new surroundings. Many people follow a familiar pattern when it comes to real estate – they scrimp and save to buy a starter home and then move on to larger and larger properties as they advance in their careers.
There is a third part of that familiar pattern – one that is often overlooked. When your career is stable and the kids are grown and gone, it may be time to downsize your home, take the profits, and move on to the next phase of your life.
No matter where you are on the real estate lifecycle, there are 5 unmistakable signs that it is time to downsize your home. If any of the following sound familiar, you may want to call a real estate agent right away. Real estate professionals understand your local market, and they will be able to guide you and help you make the most of the equity you have spent so much time building.
#1 – You Are House Rich and Cash Poor
Your home may be your biggest asset, but it should not be your only one. If everything you have is tied up in your home, it may be time to downsize the property and diversify your portfolio.
If you sell your large expensive home and buy a smaller and less costly one, you will have free cash to invest elsewhere. Whether you put that money in the stock market, buy a rental property, or just beef up your bank account, you can reduce your risk and sleep more soundly at night.
#2 – You Are Having Trouble Making the Mortgage Payments
If you do not know how you will make the next mortgage payment, you need to consider downsizing now. Many homeowners hold on when they start falling behind, thinking they can catch up later. That strategy rarely works, and the majority of homeowners who fall behind end up losing their homes.
You can protect your equity and safeguard your credit by downsizing to a smaller property at the first sign of trouble. If your mortgage payments are no longer affordable, contacting a real estate professional now can save your home and help you find a property you can afford.
#3 – You Dread Cleaning the House
The bigger the home, the more time you will spend cleaning it. If you dread dragging out the vacuum cleaner or washing all those windows, you may be more comfortable in a smaller and more manageable home.
Think about the reasons you bought that big house in the first place. Maybe you were raising a large family and needed a house with enough bedrooms for the kids. Perhaps you needed a fancy home for entertaining business clients. If the reasons you originally bought the home no longer exist, it may be time to downsize.
#4 – Your Property Taxes are Bleeding You Dry
A larger and more valuable home means a bigger property tax bill. If you hate to open that property tax envelope every year, it may be time to downsize to more modest surroundings.
The property tax burden can be quite significant, and it is important to factor taxes into your buying decision. If property taxes have gotten out of hand where you live, moving to a new town can lessen the burden and put more money in your pocket.
#5 – Your Home is in High Demand
Sometimes the market makes the decision for you. If you are lucky enough to live in a hot housing market, it can be hard to resist the urge to sell. If your home is in high demand, you might be able to profit handsomely when you sell. You can then take that money and invest it in a smaller home and keep the extra money in your pocket.
Talk to a real estate agent about the market in your area. You just might find that buyers have their eyes on your home, and you can parlay that interest into a big fat gain.