Down the road a few years we were able to realize our dream and buy our first home. Jump ahead a couple of more years and we sold that home to buy one that was considerably larger.
Of course, having a larger home meant we had higher bills to pay. Looking back I think we might have saved some money by buying a house that was a little smaller.
If buying a home is in your future plans, carefully consider all of the facts before you sign any contracts. Sure, there are lots of advantages of having more space. However, there are also lots of ways a smaller home can benefit your budget.
1. Smaller Monthly House Payment
Obviously one of the ways a smaller home can help you is with a smaller monthly house payment. It’s true that not everyone who owns a home will have to get a mortgage. But many people can’t pay cash for a house and need to get a loan of some kind.
Therefore, it makes sense to get the smallest house possible to meet your needs and your budget. Then you’ll be able to pay it off faster and have smaller house payments.
2. Less Overall Debt
Less overall debt is another good thing about purchasing a smaller home. With lower payments to make each month you can use your money in other ways.
For example, you could apply more money to credit card debt, car payments, and other debt you owe. Or, you could use the money for travel or for education.
No matter how you use your money, less overall debt means less stress on both you and your finances.
3. More Wiggle Room in Your Budget
There’s more wiggle room in your budget when you buy a smaller home. With lower payments, or no payments, you can not only pay down debt, but save money too.
Some of the ways you can benefit from this is by building up your emergency funds. Then you won’t run into financial trouble if unexpected expenses come up in the future.
4. Lower Utility Bills
One side benefit of a smaller home is lower utility bills. The more area you have, the more it costs to heat and cool it.
But you won’t spend as much on water either. You’ll most likely have a smaller yard to keep up as well as less to clean inside. So, in addition to having lower mortgage payments you’ll enjoy lower utility bills as well.
5. Less Maintenance
Owning a smaller home gives you less house to maintain. This is another benefit to your budget. You’ll spend less on cleaning supplies, carpet, paint, and etc. to keep your home in tip-top shape.
6. Reduced Taxes
Do you need another reason to consider living in a tiny house? The smaller your home, the lower your taxes will be on that home. That means more money in your pocket for other things you and your family need.
7. Fewer Pieces of Furniture
Having a smaller home means you don’t have to spend as much to fill it up. You’ll have less stuff and more money for other needs and wants.
8. Extra Money to Invest
If you aren’t making huge house payments each month you can use the extra money to invest. Take some of that money and invest it for your future retirement or travel. Set aside some for your children’s college education.
9. Less Interest
When you buy a house by getting a mortgage you’ll end up paying interest on your loan. The smaller your house is, the lower the amount of the loan you’ll need. With a lower loan you’ll pay less interest to your lender and keep more money for yourself.
Clearly there are lots of ways a smaller home can benefit your budget. If a new home is in your future, before you buy, make sure it fits your budget.
Track All Your Accounts With Personal CapitalPersonal Capital lets you see all of your accounts in one convenient place. Sign up now for free.
Have you considered buying a smaller home or downsizing your existing one to save money?