Why Buying Smaller is Better
Author: Keith Cook
Date Created: Oct 15, 2008 - 11:48:57 AM
Sometimes smaller IS better! Smaller homes have been getting a bum rap recently, but it looks like their popularity will be on the rise, as people look for more energy-efficient homes with smaller mortgages. Buying small can save you money and build you equity faster than a big home that you don't need. The average family today lives in a space approximately 4 times what their 1950s counterparts lived in! Do you really need all that space... right now?
The skyrocketing number of foreclosures is a sign that Americans are going to have to look beyond keeping up with the Joneses in favor of keeping up with their financial obligations. It's true that many people genuinely fell on hard times and the mortgage policies of many lending institutions are not supportive of people struggling to keep their home. However, the fact remains that many of these foreclosures come from people taking out huge adjustable mortgages on huge homes with an inadequate income to deal with the interest. Once the interest rates changed, those people could not hope to afford the payments. It could all have been avoided with the purchase of a more modest home and a fixed-rate mortgage.
Smaller homes mean a smaller mortgage and less property taxes. The smaller the mortgage, the more you can afford to pay on the principle over time. Or save up and dump a bunch of cash into the principle every chance you get, if you can swing it with your lender. Some mortgages allow for extra money to be paid on the principle every month or once a year. This not only brings your total money owed down, it brings your overall payment down, too. It's not just the mortgage that will be smaller when you think of a smaller home. You'll probably pay a lot less in property taxes, too. Property tax is determined by market value. The lower the market value = the lower the property tax for your home.
It costs less to heat and cool a smaller home. With environmentally friendly additions and renovations, a smaller house will save you hundreds of dollars every year while maintaining a comfortable living temperature. Cleaning your smaller home will take much less time and cleaning products than the larger one. Also, you'll have less room for useless items, forcing you to think carefully about impulse purchases.
Smart home hunting can result in some surprising benefits to your smaller house. If you don't need a dining room, but want extra storage space - why not seek out a house that doesn't have a dining room, but has a basement or a shed to store things? More is not necessarily better when strategically designed less will satisfy your needs. Ultimately a smaller house better designed to meet your needs is going to create a better living experience for you.
As energy costs rise, smaller homes are going to be the smarter choice. Even if you are hoping to buy a larger home in the future, a small home now can help you build equity that can be applied to your next house. The savings from a smaller mortgage, less taxes, less energy used to heat and cool and less maintenance costs will put you several steps ahead of people who buy larger homes that they don't need.
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