Selling Your House for a Downgrade Can Save You a Fortune

Selling your house to downgrade to a smaller home can make a lot of financial sense. In fact, it could potentially save you a fortune over the long-term. Here are a few things to consider about selling your house for a downgraded home. 

Downgrading

By downgrading, you are going to be able to save quite a bit of money over the long-term. First, you are going to be able to get a much smaller mortgage payment. Considering that your mortgage payment is going to be your largest payment on a monthly basis, this can be a substantial source of savings for you. It will allow you to have much more freedom and flexibility in your budget.

In addition to saving you money on your monthly mortgage payment, you are going to save thousands of dollars over the course of your mortgage term. Most people pay more than twice the value of their home, over the course of a 30 year fixed-rate mortgage. Therefore, if you can reduce the amount that you are going to borrow, you are going to potentially save a huge sum of money in interest as well.

Taxes

Another area that you could save money in is property taxes. When you buy a smaller property, you are going to have a smaller assessed value attached to it. Because of this, you will be able to pay less money in property taxes every year. Typically, this is not going to be a huge savings, but it can add up over the years. This can also be beneficial if you elect to have your property taxes paid as part of your monthly mortgage payment. This will help you lower your monthly mortgage payment even further.

Insurance

When you have a big house, you are going to have to pay more money to make sure that it is covered with insurance. Your premiums are going to be higher because you have more coverages. When you downgrade, you will be able to lower your insurance premium. This can be another source of savings when you pay your monthly mortgage payment because many mortgages charge you a certain amount to cover your home insurance premiums.

Considerations

If you are considering downgrading your house, you are going to want to think about whether a smaller house would meet your needs. If your children have moved out and you are now going to be retired, there is no reason that you should not consider downgrading. However, if you are still younger and you have small children, it may not make sense to get a smaller house.

You will also need to think about storage considerations. If you have many items, you are not going to want to have to rent a storage unit every month just so that you can hang onto all of your things. In that case, it might not make sense downgrading if you have to keep all of your possessions.

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