There are many things to consider when downsizing your home. There a number of benefits as well as downfalls with downsizing. I have gathered a list of some of the most popular items to consider when downsizing.
Smaller house usually means smaller expenses. If you have a mortgage, a smaller house will almost always cost less, and have a smaller mortgage payment. Besides the mortgage itself, taxes are usually lower as well. These monthly expenses really add up quickly. Consider if you have a mortgage on a house of $400,000 and are downsizing to condo with a mortgage of $275,000. The monthly payment (at 4.25% for 30 years) is $1967 versus $1352, a $600 difference per month. Tax savings would be $5400 versus $3800, or a $133 difference per month. You'll have to add in the association dues for the condo or townhouse of about $300. That's a total savings of $430 per month.
Utilities should also end up being less expensive since it'll take less to heat and cool a smaller house. Heating and cooling is really defined by the amount of space to be conditioned. Along with heating and cooling, water and electricity should also be less.
With smaller a smaller house there is usually less maintenance involved. Less number of bathrooms to clean. Less overall space to clean. Fewer appliances to maintain.
With downsizing, there are drawbacks as well. The main drawback is that space will be limited. This is especially true of storage space. Over many years, most people accumulate a lot of stuff and need a place to keep everything. This also includes garage space. Smaller houses (and condos and townhouses) usually can't accomodate a 3-car garage. So no room for the boat, or the snowmobiles or trailers and the like.
The smaller house may also change your lifestyle. If you like to host larger parties, make sure your smaller house can accommodate that. Keep in mind spaces for adult children if they are prone to visiting.
If your current house is paid off, then unless you want to try a simultaneous closing on both houses, you may need to get a mortgage for a short while. Else you may need to take out a small mortgage until you can sell your current house to pay off the new house.
When considering downsizing, there are several options of homes that you could look at. There are regular single family houses, along with condominiums, and townhouses. Each have their own benefits and drawbacks. If you are looking to travel more, and have less responsibilities at home, consider a townhouse or condo more than a single family home. The reason for this is it is much easier to pack up and go on a trip because the building itself is tied into other units.
With a condo, the heating and cooling and water are usually managed by the association. This allows you to have less worries about taking a longer trip as those systems are watched by others in the building. Also a condo usually has a limited number of doors so security may be better.
A townhouse will usually have more space than a condo, and may have extra garage space for storing items as well. A townhouse also usually has its own yard and maybe a patio that the condo won't have. But you are still limited in that you most likely can't put in plants or have a garden.
If you are looking at buying a single family home, you may want to consider future proofing your living by buying a rambler style houes, a one-story. As they get older, lot of people have concerns about navigating stairs. Having everything on one level makes a lot of sense. But many single-story homes won't have laundry facilities on the main level, unless it's newer.
Another consideration is what type of housing market we're in, and what type of house you have to sell. In a sellers market, it should be easier to sell your home, but on the buy side, you may be in competition with multiple offers on most houses. In this case, consider purchasing a home before selling your existing home. But keep in mind if you have a mid-bracket or upper-bracket home, even in a seller's market, these types of homes may take longer to sell than an entry-level home.