So You’re Ready to Upsize or Downsize? Here’s What You Need to Know

Whether you're outgrowing your current space or looking to simplify your life, making the decision to upsize or downsize your home is a big step. Both options come with their own set of considerations, and understanding the financial and lifestyle impacts is crucial to making the right choice. Let’s break it down so you can feel confident about your next move.

Why Upsize or Downsize?

There are many reasons homeowners choose to upsize or downsize. It often depends on changes in your personal life or your long-term financial goals.

• Upsizing: You might find yourself needing more space because your family is growing, you're working from home more, or maybe you’ve simply outgrown your current house and want more amenities, like a bigger yard, more bedrooms, or an updated kitchen.
• Downsizing: On the flip side, perhaps your kids have moved out, and maintaining a large home is more work than it’s worth. Downsizing can mean reducing costs, simplifying your lifestyle, and even unlocking the equity you’ve built up over the years for other financial goals.

Both options can be exciting, but they come with different challenges and financial implications that need careful consideration.

Financial Considerations

When it comes to making the leap, your finances will play a huge role in determining the right path.

• Larger Homes = Larger Bills: Moving into a larger home usually means taking on a bigger mortgage or using the equity from your current home to cover some of the costs. Keep in mind that upsizing doesn’t just mean a higher purchase price, a bigger home means bigger expenses. Property taxes, utility bills, and insurance premiums are all likely to increase. Not to mention, maintenance and upkeep will require more time and money—whether that’s cleaning, yard work, or general repairs. Don’t forget about furnishing and decorating all that extra space!
• Smaller Homes = Smaller Bills, But...: Downsizing can be a smart financial move. Selling your current home and moving into a smaller one can free up equity and reduce your monthly mortgage payments. But remember, even though your new home may be smaller, there are still costs associated with the move. For instance, what if the new space needs renovating or updating to meet your needs? While downsizing can mean lower property taxes and utility costs, don't be fooled into thinking it’s all savings. If you’re moving into a more urban or desirable area, property values could be higher. And let’s not forget moving costs—whether it’s hiring movers or buying new furniture, these expenses can sneak up on you.

Market Conditions

Before you make any decisions, it’s important to look at the real estate market. Is it a buyer’s market or a seller’s market? Knowing this can help you make a more informed choice.

• In a buyer’s market, you’ll have more homes to choose from, and prices may be more favorable. This could be a great time to upsize, as you’ll likely get more house for your money. However, selling your current home might take longer or fetch a lower price than you’d hoped.
• In a seller’s market, prices tend to be higher, and competition for homes is fierce. If you’re downsizing, this is ideal—your current home could sell for top dollar. On the other hand, if you’re upsizing, be prepared to pay a premium for your next home.

Understanding market trends will help you time your decision strategically, so you can get the best deal whether you’re buying bigger or going smaller.

Future Plans

When making a decision as big as moving, you also want to think long-term.

• Upsizing: Will you still need that extra space 10 or 15 years down the line? Are you planning to stay in the larger home long enough to justify the bigger mortgage and associated costs? Upsizing can make sense for growing families or those who plan to stay put for a long time, but it’s important to think about whether the bigger house will still meet your needs as life changes.
• Downsizing: While moving into a smaller home can provide immediate savings and simplify your life, make sure the new space will serve your future needs. For example, if you’re downsizing with retirement in mind, consider whether the home is suitable for aging in place. Will it be easy to maintain, and is it located near amenities that will be important later on?

Savvy Strategies for Your Home Transition

When upsizing or downsizing, there are several perks that can make your transition smoother and more financially savvy. First, you may be able to port your current mortgage to your new home, allowing you to keep your existing rate and avoid penalties for early payout. This is a great way to maintain a favorable mortgage term while moving. Keep in mind that if you’re upsizing and the new purchase price is larger than your existing mortgage, you may be able to port your current mortgage and blend it with a new one. This allows you to keep your existing mortgage rate on the original amount while securing a new rate for the additional funds needed for the more expensive home. If you’re not ready to sell your current home, you could turn it into a rental property, generating extra income while moving into your new place. There’s also bridge financing, which provides short-term funds if the closing dates on your sale and purchase don’t align, giving you peace of mind during the move. Finally, even if you’re not a first-time buyer, you only need 5% down on the first $500,000 of your new home’s price and 10% on any amount over that up to $1.5 Million—keeping this in mind can help keep your down payment manageable as you upsize or downsize.

How I Can Help

At the end of the day, both upsizing and downsizing come with their unique financial and lifestyle benefits. My role is to help you navigate these choices, ensuring you get the best deal whether you're looking for more space or aiming to simplify. From assessing your financial situation to understanding market conditions, I’ll guide you through the process and help make your transition as smooth as possible.

If you’re thinking about making a move, let’s connect! Together, we’ll explore your options and find the perfect next step for your home and financial future