Your family is growing and so is your income. You feel like its time to move into the dream home and neighborhood you’ve been thinking about for years. How do you know if it is time to move up? Can you really afford it? Will you regret it down the line? Here are some ways to feel confident in your decision to move up in house.
1- You can sell or rent your current home.
Before you start looking for another home you should have a clear idea about what you want to do with your existing home. Determine whether or not you are interested in becoming landlords. Understand how much your home can yield in a monthly rent and if it would be enough to cover the mortgage payment, maintenance on the home, and the tax implications of real estate investment income. If you decide to sell you home, find out how much the market will yield for your property and about how long it will take you to sell your home.
2- You have equity in your current home.
You will need to assess how much equity you have in your home to determine how much of a bigger home you can afford. The amount you sell your house for will determine how much money is leftover to pay for closing costs and a downpayment on your next purchase. If you do not have the equity in the house, you may want to consider renting the home until the value returns.
3- You have enough savings to financially handle the move.
Moving is a big expense that is often overlooked during the home buying process. When you are budgeting for moving up in house, don’t forget to factor in all of the hidden costs that come along with moving. Most people thinking moving costs are just limited to the cost of the moving company that actually moves your goods. However, they forget to budget for any storage needed during the move, furniture that gets broken or needs to be replaced and the supplies to pack everything up. Also, during a move it is highly likely that your family will be eating more meals out due to not having a kitchen to cook in. Moving costs can cost a couple thousand dollars and should not be overlooked.
4- You can afford and qualify for a larger mortgage.
A larger home typically means a larger mortgage and higher monthly payment. You need to be confident that you can qualify for a larger mortgage and that your monthly budget can handle a high mortgage payment. Also, buying a larger home while selling your current home can make things more complicated. Speak with your mortgage professional about whether or not your new mortgage approval is conditional on you selling your current home. Furthermore, find out if you must net a certain profit from selling your home to meet your mortgage approval conditions.
5- You can afford the extra costs of having a bigger home.
Lastly, a bigger home will mean greater costs. Factor in higher utility payments and homeowner’s association dues in your new area. Consider whether or not you will need to pay for house cleaning or landscaping maintenance. You don’t want moving into your dream home to turn into a nightmare because you overlooked these items.
Buying a larger or more upgraded home can seem overwhelming and scary if you are not in the right place. However, if you are financially and emotionally prepared for this change buying a larger house can be a wonderful opportunity. Use these guidelines to feel confident in your decision to move up in home and enjoy the process.