considering downsizing to townhome.. worth it?

[cantora87]

We currently own a 3 bed 2 bath split-level for just my hubby, me, and our newborn. For almost 2 years we've wanted to downsize and simplify but have been overwhelmed by the prospect of selling and haven't found anywhere we wanted to go. We don't want an apartment that we would never be able to pay-off--our goal is to be debt-free asap. We have found a townhome for sale for 40K less than we still owe on our house and it's a comfy 950 sq ft. It's close enough that hubby could bike to work, so we could downsize to 1 car. But all owners have to pay 185/month. That covers all exterior/structural/yard upkeep. So, my question: is it worth it? We would live there at least until we paid it off and had a good chunk in savings to eventually buy some land and homestead. That's our dream, anyway.

[Crayfish]

This is a question that would have me creating a spreadsheet. Various factors that I'd consider would include:

 

- The funding level and general financial status of the HOA. As a prospective buyer, you should be entitled to this information. 185/month sounds startlingly low to me (though of course it would depend on the region). IMO a low rate isn't necessarily good - it may mean that the HOA doesn't have enough money saved, that you could be liable for special assessments, and that the townhome might be worth less than it appears, because of those potential financial issues.

 

- How much you spend on external maintenance for your existing home, as an expense to balance against the HOA fee.

 

- What it would cost to fix up your current home for sale.

 

- What you might want to spend to fix up the new home to suit your family, including remodeling, changed furniture, etc.

 

- The percentage that you'd pay to your realtor if you sell.

 

- All the various fees for the new loan on the new place.

 

- Moving expenses.

 

- The difference in monthly mortgage payments. (I'd guess that your interest rate would be lower, but if I'm wrong then you might save less than you expect.)

 

... OK, there's probably more, but that's what I thought of first.

[Oliver's Mama]

everything listed above.

As someone who currently lives in a townhome (me, dh, 2 little kids, and baby due next month) Our 2-bed townhome is misery. (about 950 sq ft as well)  We've simplified, but if you plan to have more than one kid, you need to make sure you'll have enough physical space for them to get their energy/sillies out.  I long for a home with a fenced in yard that I can just let the kids out into. Sure we have communal courtyard areas, but they're tiny and surrounded by parking and retention ponds, and it's not as easy as it seems to just swing by the playground with 3 kids on different schedules.   I'd say the noise/smell issue from neighboring units is comparable to apartment living, too.

We were hoping to only live in a townhome for a few years when we had just a newborn, but now we're trapped.   townhomes seem to have higher forclosure rates so the values in our neighborhood are horrid... our place is worth about half of what we paid for it a few years ago.

It's also perfectly fine to live a simple and/or minimalist life without a closet-sized home.  Empty space can be a vital element to one's happiness and sanity.

well enough personal ranting. Just some things to consider if you plan to expand your family anymore.

[Pepper44]

We are in a similar situation--we bought a 1,000 sq ft home as a starter home.  Now we can't sell it for what we owe because there are so many new construction homes all around that are newer and bigger in the same price range.  

1,000 square feet is just not big enough! It was ok with a toddler and just us, but now that we have a 6 year old and 2 year old it's way too crowded for them to spread out and play, homeschool comfortably, and so on.  With a third baby on the way we're starting to panic a little. We don't even have room for adequate dresser space for everyone and the closets are so tiny!  

[rnra]

I agree with the others--if there are plans (or even thoughts of potential plans) for more children, then I would stay away from a townhouse.  The structure of townhouses just doesn't work well for families with 2+ kids.  Plus, the yard thing is an issue too (as mentioned above).  

[sunshineafterrain]

Could you rent out your basement?

If so, then the whole house would be used, you could pay down your mortgage and have extra cash.

If your family grows and you need the space again you can stop renting out the basement and use that space for your family.