Is downsizing your home right for you?

As your life evolves and goals change, it may make sense to reassess your housing situation. Downsizing to a smaller, potentially less expensive home is one way to reallocate your funds away from housing expenses to prioritize other goals. But before you put your home on the market and start shopping, you'll want to assess your financial situation and create a plan to make your move as seamless as possible.

While every homeowner's goals and lives are different, two general factors could signify when may be the time to downsize your home:

1. Your home no longer matches your life's needs

Age is a common factor that influences downsizing as people approach retirement or as children leave home. However, age is not the only factor to consider when choosing to downsize. Other lifestyle changes that could impact your decision include:

• A divorce or a change in marital status
• A change in health or mobility that requires a different living environment
• A desire to move to a new location or be closer to family
• A desire to declutter or reduce personal items

2. Other goals and milestones are more important to you than your home expenses

Over time, you may realize that other financial and lifestyle goals have become higher priorities and could benefit from the time, money, and effort you currently spend on home maintenance. One benefit of downsizing is that you can reallocate funds used for home expenses and upkeep — or, in some cases, you may be able to unlock your home's equity — and apply those funds toward other goals, including:

• Retirement planning
• Paying off debt
• Saving for a big expense, such as traveling
• Supporting family members with their financial goals, for example, a child or grandchild's education costs

• Your current home's equity and value – After owning your home for several years, it's important to know how its value has changed over time. If your home has gained equity, you may choose to use that equity toward other goals.
  Get exclusive access  to track your home's estimated value, see how renovations could improve your value, and view price and sales trends for your new neighborhood.
• Your future home's value – Knowing the value of both your current (and future) home will help you accurately anticipate your finances after its sale, especially if it's important to you to make a profit from selling your home.
• Credit, debt, and DTI – Whether you're downsizing or buying your first home, you should know your credit score and debt-to-income ratio (DTI), as lenders will review these anytime you apply for a home mortgage loan. Knowing your DTI may also prove beneficial if you are downsizing to prioritize other goals that require a loan.

• Waiting to declutter – If you've lived in your home for many years, start decluttering well before your move date. You may wish to sell or donate unused belongings, like furniture or clothes, remove all unused or broken items, or consider giving unwanted personal items to children or other family members.
• Not knowing your home's value – Forecast your home's value early and often, especially if you plan to use the proceeds from your home sale toward your downsized home or toward other life goals.
• Not establishing a moving plan – While downsizing may make your life more simple, it still requires the same attention and planning you would take for any home purchase and move. You can work with a real estate agent to coordinate your sell-by and move-in dates and consider hiring movers if you bring any large items to your new home. Downsizing may be a viable option if it aligns with your life goals and financial situation. If you're ready to start looking for the perfect downsized destination, explore our tips as you start your home search, and talk to a home mortgage consultant for more information.