Pros And Cons Of Buying A Smaller Home
By Gustan Cho
Buying a home is not like buying a car or other high ticket items. Unless you are a real estate investor, chances are that if you are buying a home, you intend in living there for several years, raise your family there, and call it home where you meet new neighbors and develop lifelong friends with them and be part of the community. Besides choosing the neighborhood you want to live in, another big consideration you need to make is how much home do you need. Do you want a larger home? If so why? How many people are in your household? Do you need multiple bedrooms and multiple bathrooms? Do you need finsihed attic and basement? Do you need acreage or does an average size lot do?
Many home buyers think bigger is better, however, there are many benefits in buying a smaller home. Even if you can afford a larger more expensive home, a home buyer should think both the pros and cons of both buying a larger home and the benefits of buying a smaller home.
Personally, I have lived in a smaller home as well as a super large home that exceeded 15,000 plus square feet. If I had all of the money in the world and if I had to do it all over again, I would settle in a smaller home due to the many more benefits of buying a smaller home than owning a larger home.
Maintenance And Costs: Benefit Of Buying A Smaller Home
One of the biggest benefit of buying a smaller house is that you have to spend less time maintaining your home and cost you much less in paying for utility bills as well as have lower property taxes and insurance premium. If you own a larger home, you still need to clean and provide heat and electric on rooms that you do not use. For homeowners in the midwest, gas bills can get outrageous during the cold winter months and whether or not you occupy the rooms that you do not use in your home, you still need to heat the space whereas if you don’t, you will have costly plumbing breaks where it can cost you thousands. During the summer months, electric can really run you several hundred dollars per month in cooling your larger home.
Larger homes have mutliple heating and air conditioning systems. HVAC, electrical, and plumbing repairs and annual maintenance can get quite costly. One of the big benefit of buying a smaller home is that your repair and maintenance costs will be less than a larger home. Repairs and maintenance costs also include if you need to replace a roof, replace windows or doing other repairs and maintenance on your home.
Decorating a smaller home is easier and much less costly. If you purchase a 5 bedroom home with 4 bathrooms and you only need 3 bedrooms and 2 bathroom, you still do not want the unneeded rooms vacant and will want to decorate them. Furnishings can get quite costly and decorating a larger home can be extremely time consuming.
Property Taxes And Insurance
Larger homes are more expensive than smaller homes which translates into higher property taxes and insurance costs. You can never avoid property taxes and insurance even if your home is paid for and free and clear of any mortgage loans. Depending on the area you live, property taxes on a larger home can cost you thousands more a year than property taxes on a smaller home. Same goes with homeowners insurance premiums. Larger homes cost more money to insure.
Other Benefits Of Buying A Smaller Home
Smaller homes are easier to sell than larger homes. McMansions and mansions sometime take many months to sell, even years. Many home buyers who want to purchase McMansions and mansions have the financial ability to purchase land and custom build their own homes. Smaller home buyers can qualify for a residential mortgage loan much easier and faster. Traditional mortgage lenders have lowered the maximum lending limit in 2014. FHA mortgage lending limit used to be $410,000 but it got lowered to $271,000 in early 2014 which means that home buyers who need a mortgage loan higher than $271,000 need to seek a conventional loan. The maximum conventional mortgage lending limit is capped at $417,000 and those home buyers who need a residential mortgage loan higher than $417,000 need to get approved for a Jumbo mortgage. Jumbo mortgage loans are much tougher to qualify for than conforming conventional mortgage loans. Jumbo mortgage lenders cap the maximum debt to income ratios to 40% debt to income ratio, require higher credit scores, and most Jumbo mortgage lenders require a 20% down payment on a home purchase. These tougher mortgage lending requirements will restrict home buyers when it comes to sell your larger home.