Took on Too Much House? 3 Options to Look At

by Maurie Backman | Updated July 19, 2021 - First published on June 5, 2021

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A large living room with tall windows and a big fireplace.

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If your house is too large or expensive for you, here are some moves you may want to make.

You'll often hear that taking on too much house is a mistake you'll end up regretting. Not only can going big on a home purchase leave you with a mortgage you struggle to afford, but it could leave you with added costs like high property taxes, tons of maintenance, and expensive utility bills. If you've taken on too much house, here are some options worth considering.

1. Refinance your mortgage

If you're having a hard time keeping up with your mortgage payments, refinancing could help shrink them. When you refinance, you exchange your existing mortgage for a new one with more favorable terms. That could mean turning a 15-year loan into a 30-year loan with lower monthly payments. Or it could mean keeping the same loan term but lowering your mortgage's interest rate so your payments go down. There are different options to play around with, and refinance rates are competitive across the board right now, so it's an option worth exploring if your current mortgage is busting your budget in a serious way.

2. Get a tenant

If you bought a larger home, you may have the option to rent out a portion of it. That rental income could help offset your expenses and help you cover your mortgage on an ongoing basis. You'll need to make sure you're allowed to bring in a tenant before advertising that you're looking for one; your local municipal zoning board should be able to tell you what options you have in that regard. But if you have a finished basement or another separate space in your home that lends to privacy, getting a tenant may be feasible -- and financially worthwhile.

3. Downsize and move

Maybe you've come to the realization that you don't actually need 4,000 square feet of living space to be comfortable. And you may be tired of sinking tons of money into heating and cooling that space. If you've gotten in over your head, your best bet may be to list your current home and find a smaller one to move into. The good news is that right now, the housing market is hot, so you're likely to get a good price for your home once you go to sell it. The bad news, however, is that there's a limited supply of smaller homes on the market, so finding one to move into may be a challenge. But even if you can't downsize right away, it's something to put on your radar for when the housing market opens up, which could happen later this year.

If you've taken on too much house, you may be digging yourself into a deeper financial hole by the day. And you deserve better. Rather than harp on your mistake (hey, we all make them), figure out the best solution to move forward from it. You may find that refinancing or taking on a tenant helps you stay in your home without busting your budget. Or, you may decide that moving is the best solution. Either way, you aren't stuck, so the key is to figure out the best choice for you.

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