The Benefits of Buying a Smaller House
HGTV and Pinterest have changed the standards for what homebuyers expect in a house.
Even on the low end of the house-hunting price spectrum, people look for features that would have previously been considered luxuries reserved for only the most expensive homes. Stone countertops are a must, and a house without a dedicated laundry room is a thing of the past – what, are we living in the Dark Ages?
But I’m here to tell you: It’s OK to think smaller. Nay, it’s best to do so.
No, I’m not advocating for tiny houses.
But most people go out and get a pre-qualification letter for a mortgage that says just how much they can afford. And then they immediately begin looking for houses at the top of that price range.
If a bank said, “You can afford to spend up to $500 per month on your cable bill,” would you run out and start looking for the most expensive, flashy cable plan? Of course not. You want value and function for the best price.
Think about your home the same way. It’s not a luxury to flaunt, it’s a tool. It keeps your family warm and dry and safe.
Change how you think about your dream home
Yes, there are home luxuries that will be worth the cost. Energy-efficiency is one of them. Security features might be another.
But instead of dreaming about how glamorous you’ll feel folding clothes in a fancy laundry room rather than sitting on the sofa, imagine what you might be able to do with the thousands you could save per year if you bought a slightly smaller house with a simple laundry closet.
If you get a mortgage that’s $100 less and invest that money instead, you’d have more than $7,000 in the bank in just 5 years. And your clothes would still be clean.
Think about whether you’d still be able to prepare meals for your children on Formica or butcher block countertops rather than granite.
Think about the time and money a plastic insert tub would save over annually re-sealing the grout in an intricately tiled bathroom.
Imagine how much easier an 1,800-square-foot house would be to keep clean compared to one with 3,000 square feet.
What if you bought a home for $50,000 less?
If your bank approved you for a $300,000 home, and you purchased for $250,000 instead, you’d save about $238 per month ($2,800 per year) on your mortgage payments.
Here’s a look at some things you could do with that savings:
- You could book a trip in June to Disney World every year for a family of four, staying in a budget-friendly resort for $2,735.
- If you purchased the home when your child was a year old, you could have more than $87,000 saved for college by age 18.
- You could go out twice a month for a nice $60 dinner and still have about $60 to pay a babysitter for the night.
- You could put the difference each month back into your mortgage. The home would be paid off in 22 years instead of 30, and you’d save nearly $54,000 in interest payments. That $50,000 savings is now over $100,000.
Don’t let TV warp your mind
You’ve probably got some fond memories of your mother or grandmother working away in the kitchen at Thanksgiving. Boy, were those some delicious meals, right?
You probably remember the taste, the smells, the sounds of family.
Did you ever once hear anyone complain that the kitchen didn’t have granite countertops or stainless steel appliances?
As consumers of both products and television, we tend to get sucked into buying and loving what designers tell us is the best. Don’t fall for it.
You want a kitchen that’s functional and that leaves you with enough money to spend on the things that really matter – time and experiences with your family.