by Gail Browser
(Atlanta, Georgia, USA)
The worldwide recession we are currently experiencing is forcing many people into taking drastic action in order to survive financially. Although the changes are often painful, in the long run this forced economizing may be a great benefit for many people.
In fact, the crazy real estate market has actually created a great opportunity for many people. Downsizing your home or your mortgage may save many thousands of dollars and actually greatly improve your living circumstances.
You may wonder why I use the phrase “downsizing your mortgage” instead of simply “downsizing your home”. This is an important distinction. You will want to explore both options as you decide on the best way to lower your housing costs.
The traditional path of downsizing your home may be the best option for you. Maybe you have raised your children and they no longer live athome. Maybe in the crazy real estate markets of the last several years prior to the recession you just bought more home than you want to take care of now. Either way, you simply no longer need the cost of maintaining a larger home.
On the other hand, the present real estate and mortgage markets may have created an excellent opportunity for you to sell your present homeand buy an equivalent home at a much lower price with an equivalent much lower mortgage. If you can sell your home in today’s market, you find that you can replace it for a much lower price today.
In fact, some combination of both of these options may be right for you.
Here are some factors you need to consider when deciding on a plan for downsizing your housing costs.
1 – How flexible are you when it comes to buying a home?
When you have children in school, the city, county or school district where your house is located may be your primary factor in deciding where to live. If you aren’t limited by this factor, you may want to start exploring other markets where prices are lower and taxes are lower. Flexibility in this one area can have the most significant impact on your housing costs. If you are willing to move to a less expensive area you have an enormous opportunity to save many tens of thousands of dollars. Even if proximity to work is a consideration, investigate areas that may be just as close but less expensive. In addition, you may save enough to make a longer drive acceptable.
2 – What are the housing market conditions in your area?
In most areas, we are in the middle of a huge buyer’s market. This means that because of the current difficult real estate and mortgage markets, there are more houses for sale than there are buyers. However, remember that real estate is very local. You may be in an area where houses are still selling for good prices. You need to research your local market to find out where you stand when it comes to selling your home. You may find that you are actually in a position to make a profit on selling your home.
You may also find that you can sell but won’t make any profit, or you might even find that you will have to spend some of your savings to get out of your current home without negative impact on your credit standing. In order to decide on the best course of action, you will need to take the time to become very knowledgeable about the housing market in your area. It will definitely be worth the time it takes to do the research.
3 – What are the housing market conditions in surrounding areas you might consider living in?
The other side of this equation is the housing market in the area you might consider moving to. Whether you are lowering costs by getting into a smaller home or one that is cheaper and easier to maintain, or you are trying to end up with a lower mortgage amount you will still need to become very familiar with housing values in the areas you might move into. This can be a lot of work, but again it pays to do the research. The more you know about real estate values, the better deal you will get on both sides of the transaction.
If you are hoping to achieve real savings by downsizing your home or your mortgage or both, the key factors are flexibility and knowledge. The real estate market is fairly unique in that sellers and buyers can gain an advantage when they know more about the market. In the stock market, the price is the price. You can check online and know exactly how much a share should cost. This isn’t the case in the real estate market. The more flexible you can be about where you live and the more knowledge you have about the real estate market, the more money you will be able to save.