In recent months, I have spoken to quite a few people that are concerned with keeping their expenses low in this economic environment. After all, it’s a smart practice in case the economy has a relapse, you lose a job, or you have some unexpected expenses.
For most of us, our biggest expense is our home and more specifically, our mortgage. So it’s not surprising that I have had a lot of conversation with people looking to downsize. Many people have come to the realization that they really could do without all of the extra space. In fact, they say to me, “We don’t really need 4500 square feet. We could do just fine with 2700 or 3000.” What they’re really saying is, “I wouldn’t mind going from a $475,000 dollar home to $350,000 dollar home and saving a thousand dollars a month in mortgage. Again, it’s sound, smart thinking.
Usually, what holds them back from making the move is that they’re concerned about how much money they’ll lose on the sale of their home. Of course, we all know our homes aren’t worth what they used to be, but if you bought smart (location, location, location), maybe, just maybe, you won’t take a huge hit. I also tell potential sellers that you could make up what you lose on your home in the purchase of a new home. After all, someone will be buying your home low and you’ll be buying someone else’s home low. It may be a moot point.
Since this is the first week of the New Year, it’s definitely a good time to start thinking about smart financial planning. The middle of winter is also a good time to find a deal. Don’t wait until the spring when everyone comes off the sidelines and the competition is high. Make a deal in January, February, or March when traffic and competition for premium homes will be less. This also may be a good time to look at buying low on a fixer upper. Spend some sweat equity, do the improvements yourself, and move into a nice home with a nice low mortgage.