You love your home. It was your first major purchase and it has provided shelter for you and your family for many years. But there may come a time when your home just isn’t as comfortable as it used to be.
How do you know that your family is ready for a home upgrade? Here are some points to consider:
Have you outgrown your present home?
Let’s say that you’ve grown into a family of five, with sundry pets and what seems like tons of stuff accumulated over the years. You need more bedrooms and bathrooms, perhaps a recreation room, and plenty of additional storage space. The need for more space is one of the best reasons to move into a bigger house.
Even older couples may still find the need to upgrade if they decide to take in relatives, such as an elderly parent or a child – perhaps with their families – who have decided to return to the nest to save on rental costs.
Can you afford the additional costs that come with a bigger home?
A larger home often means a higher mortgage. It also typically comes with higher insurance and property taxes. In addition to that, it will need more upkeep and maintenance, which translates to additional costs. Plus, you might need to buy new furniture and appliances to furnish the home.
Check your finances to see if you can comfortably handle the increase in your expenses and still afford the extras you’re used to like the family vacations, the kids’ ballet or sports lessons, or club memberships. More importantly, look into how the costs of a new home might affect your ability to save.
How easily can you get financing?
To get excellent loan terms, you need an outstanding credit score. Lenders will look closely into your debt-to-income ratio, which ideally should be no higher than 36%. Lenders will also require that you earn about three times more than the monthly payment for a home.
You also need to consider future expenses. You might have to buy a new car, or a child might be going to college. Factor that into your finances to see if you can afford both a higher mortgage and any major additional expenses.
How soon and for how much can you sell your current home?
Your ability to buy a new home may be contingent on selling your existing home. Or you might need the cash for the down payment and other upfront costs of the new home. Check the prevailing market conditions to have an idea of how soon you can sell your home and for how much.
Likewise, look into your equity. If your property is underwater or if your home’s value has dipped considerably from when you bought it, getting financing for a new, bigger home might be more of a challenge.
How will moving to a bigger home affect your future decisions?
A bigger home can definitely help improve your lifestyle. Keep in mind, though, that if you want to downsize in the future, you may once again need to sell the home, and given changing market conditions, that could prove to be another big challenge. That said, it’s best to look at upgrading to a bigger home as something that you need, not as an investment that will yield a bigger profit.
If you’re thinking of upgrading to a bigger home in Boulder County, I can help you in making the tough decisions and guide you to the perfect property. Call me at 303-443-6161 or 303-359-6627, or email me at MHughes@LIVSIR.com.